JAKARTA (TheInsiderStories) – Indonesia’ retail sales index (RSI) dropped 0.3 percent in January from previous month at 0.5 percent, said the central bank today (03/10). The policymaker also predicted in February the retail sales to have remained week, estimating an annual drop 1.9 percent.
The main contributors were led by a decrease in sales of clothing as well as information and communications Equipment and flatter sales of spare parts and accessories also food, beverages and tobacco. Bank Indonesia (BI) data showed, the RSI in January was 217.5, down from the December 2019 index of 235.1.
The decline was caused by a decrease in sales in the clothing sub-group and a slowdown in parts and accessories group sales. Nonetheless, the annual retail sales growth in January 2020 slightly improved or grew by -0.3 percent compared to last year of -0.5 percent.
The latest survey indicated that inflationary pressures in the next three months are likely to increase, yet milder in the next six months. This prediction is reflected by an increase in the three-months price expectation index (PEI) to 165.5 in April 2020 from 160.2 a month earlier, and a decrease in the six-months PEI to 161.8 in July 2020 from 166.00 in the previous month.
On Feb. 6, BI announced the consumer confidence index (CCI) dropped to 121.7 in January from 126.4 in December 2019. Nevertheless, the Bankstill confidence the consumer optimism occurs in all expenditure groups will improve in the future.
The weakening of consumer optimism, according to BI, was caused by the decline in the index of current economic conditions by 3.5 points to 109.6 from the previous month and the index of expectations of economic conditions weakening 5.9 points to 133.7.
According to central bank, the CCI occurred in all categories of respondents’ expenditure and respondents’ age categories. Consumer perceptions weakened due to declining consumer confidence in the availability of employment today compared to six months ago.
Moreover, consumer confidence in durable goods also contracted from 117.5 to 113.7 on electronic goods and household furniture. Then, optimism about the availability of jobs was observed to be weak as indicated by the availability of employment in January which fell from 101.1 to 97.6.
Consumers estimate that job availability in the future will not be as high as the previous month, reflected in the index of job availability expectations recorded at the level of 120.0, or down 7.1 compared to last month.
Along with the weakening of the other components of optimism, consumer confidence in current income declined 3.2 points from December at 117.5. Under these conditions, consumers expect consumption spending in the next three months to increase from the previous month, indicated by forecasts for household consumption through April which is expected to advance from 160.9 to 162.6.
Perceptions of current economic conditions and expectations of future economic conditions remain favorable underpin consumer optimism. Consumers view positively the current economic conditions, especially from the condition of income and purchases of durable goods.
In addition, consumers continue to have positive expectations regarding income, availability of employment, and business activities in the next six months. Consumers are forecasting an upward pressure on price increases in the next 12 months (January 2021).
This is indicated by the 12-month PEI that will increase compared to the index in the previous month. The increase in price pressures is influenced by higher demand for the next year
On the supply side, economic growth is expected to be supported by the industrial sector which will increase between 5.0 – 5.5 percent. While the unemployment rate is expected to fall to 4.8 – 5.0 percent, accompanied by a reduction in the poverty rate in the range of 8.5 – 9.0 percent.
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