Bank Indonesia reported, the Real Sales Index for June 2020 contracted 17.1 percent on an annual basis, improving from a contraction of 20.6 percent in May 2020 - Photo: Privacy

JAKARTA (TheInsiderStories) – Still in a contraction phase, the retail sales survey started to improve in June, said Bank Indonesia on Tuesday. The central bank reported, the Real Sales Index (IPR) for June 2020 contracted 17.1 percent on an annual basis (YoY), improving from a contraction of 20.6 percent in May 2020.

Improved sales occurred in almost all commodity groups surveyed, especially the fuel group. Motorized vehicles, food, beverages and tobacco, as well as information and communication equipment, inline with the relaxation of large-scale social restrictions.

In July, there are indications that retail sales performance will continue to improve, even though it is still contracting. This is reflected in the forecast for July 2020 IPR growth of -12.3 percent (YoY), up from -17.1 percent (YoY) in the previous month.

The improvement in retail sales performance is predicted in the food, beverage and tobacco category as well as other household supplies. Concerning prices, inflationary pressure is predicted to ease in the next three months (September), while inflationary pressure for the next six months (December) is predicted to increase.

Indications of a decline in price pressure are reflected in the General Price Expectation Index (GPIE) for the next three months of 131.5, lower than the previous of 138.6. Meanwhile, the GPIE for the next six months was recorded at 156.1, higher than the  of 142.5.  This increase is inline with the predicted increase in activity during the Christmas and year-end holidays.

Statistic Indonesia just reported the country experienced deflation of 0.10 percent in July compared to prior month (MoM) experiencing 0.18 percent percent of inflation. This development was influenced by the inflation in the core group which remained low as well as deflation in the volatile food and administered prices groups.

Annually, the consumer price index (CPI) was recorded at 1.54 percent (YoY), or down from 1.96 percent in the previous month. Bank Indonesia assured will continue to consistently maintain the price stability and strengthen policy coordination with the government to keep the inflation low and under control within its target of 3.0 ± 1 percent by 2020.

Core inflation in July 2020 was recorded remained low at 0.16 percent, although it increased compared to the previous month’ growth of 0.02 percent due to the increase in gold prices. Low core inflation was reflected in several commodities, such as sugar, ground coffee and onions, which recorded deflation of 4.23 percent, 0.36 percent and 5.05 percent, respectively.

While, the gold inflation was recorded to have increased from deflation of 1.18 percent to 5.02 percent parallel with the increase in world gold prices. Annually, core inflation was recorded at 2.07 percent (YoY), slower than inflation in June of 2.26 percent.

The volatile food category recorded deflation of 1.19 percent in July, down from the previous month, which experienced inflation of 0.77 percent. The deflation in the volatile foods category was mainly influenced by lower prices for food commodities such as onions, chicken meat and rice.

This development is also inline with slowing domestic demand and adequate supply, supported by the impact of the harvest, controlled distribution in various regions, and low global food commodity prices. With these developments, annual volatile food inflation was recorded at 0.35 percent (YoY), lower than inflation in the preceding month of 2.32 percent.

In the same month, the administered prices group experienced a deflation of 0.07 percent after recording an inflation of 0.22 percent in June. This deflation was primarily due to lower air transport fares in line with airlines’ adoption of the ticket price reduction strategy.

While, the tariff for intercity transportation and four-wheeled vehicles online, as well as the selling price of various cigarettes, has increased. Annually, administered prices inflation was recorded at 0.70 percent (YoY) in July, higher than inflation in the previous month of 0.52 percent.

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