Indonesia Consumer Confidence Down Again

27 04 2007

The Consumer Confidence Index (CCI) fell again in March, down 2.0% to 81.1 from 82.7 in February. Over the last four months the index has now fallen 10 points. Weighing on consumer sentiment has been the high prices of basic foodstuffs – especially rice – which have hit consumers where they feel it most – in the pocket.

Both components of the CCI posted declines. Consumers are especially concerned over the state of the current economy, high rice prices and weakening family income. The Present Situations Index (PSI) dipped 1.9% to 60.2 in March, while the Expectations Index (EI) fell 2.0% from 98.8 to 96.8, its lowest level since February 2006.

Despite the battered confidence of consumers, buying plans have remained remarkably firm, bolstered in part by declining interest rates. The buying intentions of the middle to high-income households increased significantly, especially of the respondents in Jakarta. The latter may wish to replace home appliances damaged by the severe flooding in February. Against this backdrop, the proportion of consumers who plan to buy durable goods surged from 24.0% in February to a one-year high of 26.6% in March.

Amidst news of political scandals involving some cabinet ministers, the Consumer Confidence in the Government Index (CCGI) fell for the fifth straight month. The CCGI shed 1.7% to 116.7 in March, its lowest level since October 2005 when the government took the decision to hike fuel prices by more than 100 percent. In particular, consumers were less satisfied with the government’s ability to stabilize prices. This index plummeted 7.2% to its lowest ever level of 72.7 in March.

Going forward, we do not expect big changes in consumer confidence unless prices of rice and other basic commodities fall much or there are significant changes in the national economy or policy changes. As such, barring some unforeseen event, consumer confidence among Indonesian consumers should remain in the mid eighties to low nineties over the next few months. Get the full report.




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