Rising Prices Hit Consumer Confidence

14 04 2008

Consumer Confidence weakened in March. The Consumer Confidence Index (CCI) retreated 4.5% to 76.7, after recording a slight increase in February. Both components of the CCI declined: the Present Situations Index (PSI) fell by a hefty 8.3% to 55.2 while the Expectations Index (EI) declined by 2.7% to 92.9. A number of concerns have weighed on consumers in recent weeks, including rising prices of basic foodstuffs, higher prices of goods, weakness in the job market and natural disasters such as flood.

Nonetheless, consumer confidence improved in two of the six regions surveyed in March. The CCI in Jakarta rose slightly by 0.7% to 82.4 and the CCI in Central Java added 5.9% to 81.2. Of the regions where confidence deteriorated, the biggest decline in the CCI was seen in East Java (where the CCI slipped 12.1% to its lowest ever level of 65.1). Consumers in this province cited an increase in basic foodstuff prices and a lack of jobs as their major concerns.

At the same time, confidence weakened in both rural and urban areas (the CCI for the former group fell by 2.6% to 77.9, while the CCI for the latter group dipped 5.3% to 76.3). As such, it seems that urban consumers are suffering more than rural consumers from the increases in basic foodstuff prices. Read the rest of this entry »

Confidence Rebounds as Worries of Rising Food Prices Ease

12 03 2008
CCI March08

As fears of rising food prices subsided, consumer confidence rebounded in February. Optimism toward the economy’s future outlook increased as the economy turned out to be not as bad as initially perceived. Against this backdrop, the Consumer Confidence Index (CCI) recovered in February, up 2.5% to 80.4 from a two-year low of 78.4 in January.

Last month, consumers were burdened by rising food prices and kerosene fuel shortages. Job opportunities were also scarce. However, present conditions did improve somewhat, since the kerosene shortages were not so acute, while prices of rice eased even though the prices of some imported basic foodstuffs remained high. Against this backdrop, the Present Situations Index (PSI) edged up 0.2% to 60.2 in February. Yet despite the slight increase, the very low level of the PSI shows that consumers still have strong concerns over the state of the economy.

The relatively lower inflation in February raises consumer hopes of better living standards over the next six months. Looking ahead, the majority of consumers expect busier economic activities in the months ahead. Against this backdrop, the Expectations Index (EI) climbed from 92.1 to 95.5 in February.

As consumers are more upbeat on the nation’s outlook, consumer appetite for the purchase of big-ticket items increased in February. The proportion of consumers who plan to buy durable goods rose to 26.6% from 25.1% in January. Notably, buying intentions for goods often purchased on credit – such as houses, land, motorcycles and home appliances – all rose thanks to the declining loan rates. Also encouraging consumers to spend are the huge discounts on luxury goods (including audiovisual products).

The Consumer Confidence toward the Government Index (CCGI) fell 4.8% to a five-year low of 93.3 in February. Notably, consumers remain unconvinced in the government’s ability to spur growth (the index fell 7.2% to its lowest ever level of 86.6). In fact, consumers remain doubtful that the economy can grow quickly enough to generate new job opportunities in the months ahead. Download Report

Consumer Confidence Hits Lowest Level in More Than Two Years

5 02 2008

Consumer confidence sank in January to its weakest level since October 2005 as gloom over current economic conditions increased. The Consumer Confidence Index (CCI) fell 5.9% to 78.4 from 83.3 in December. It appears that the recent rise in basic foodstuffs prices hit consumers’ feelings about the current environment. Besides, job scarcity and kerosene fuel shortages are also all to blame for a 9.1% plunge in the Present Situations Index (PSI), its lowest level in seven months.

At the same time, the Expectations Index (EI) also weakened in January, down 4.3% to 92.1. As has been the case for the past several months, the main drivers of consumers’ increasingly pessimistic outlook is the continued expectations on rising prices, particularly basic foodstuffs prices, declining income prospects and worsening job outlook.

The latest survey shows that consumer confidence declined for rural households much more than for urban respondents. Note that consumers in rural areas have seen their incomes dry up as they wait for the next harvesting season. For rural respondents, the CCI slumped by 9.5% to 77.4, while for urban respondents, the CCI only fell by 4.4% to 78.8 in January. Read the rest of this entry »

Consumer Confidence Finally Recovers

7 12 2007

The Consumer Confidence Index (CCI), which had been in a downtrend since July 07, perked up in November to stand at a level of 86.5, up 5.2% over the previous month. Propelling the increase in the CCI was the 9.2% jump in the level of the Present Situations Index (PSI) to 68.3 after it had slumped to a four-month low of 62.5 in October. At the same time, the Expectations Index (EI) rose 3.3% to 100.2 from 97.0 in October, giving rise to hopes of a pick-up in consumer spending.

Declines in basic foodstuff prices and upbeat assessments on the overall state of the economy have helped to quell consumer concerns over the prospects for the economy in the months ahead. At the same time, consumers should spend more – especially on traveling – during the holidays at the end of the year. This should give a timely boost to the economy. Read the rest of this entry »

Confidence Down Again

7 11 2007

The Consumer Confidence Index (CCI), which had declined by 1.9% in September, fell further in October, losing 0.9% to a fourmonth low of 82.2. Weaker job growth coupled with concerns over the economy continue to worry consumers and make them anxious in regard to future developments. As such, both components of the CCI saw falls. The Present Situations Index (PSI) dropped the most, down by 2.0% to 62.5, while the Expectations Index (EI) edged down 0.3% to 97.0.

Unlike in September, when declines in confidence were due to transitory factors such as the seasonal surge in prices due to the Idul Fitri celebrations, October’s decline in confidence was mostly driven by concerns over weaker job growth. More over, rising prices and kerosene fuel shortages in some parts of the country have also dampened confidence, especially of people living in urban areas.

Buying intentions weakened further in October. Consumers fear that with tougher times ahead they will see no appreciable improvement in their incomes. And if salaries are not hiked by more than the rate of inflation in the near future, then purchasing power is unlikely to pick up. As such, the proportion of consumers planning to buy durable goods over the next six months slipped from 26.2% to 25.4%, its lowest level since April 2007.

With concerns over unemployment and the kerosene fuel shortages, the index measuring consumer confidence in the government (CCGI) dipped 2.8% to 97.3 in October. In particular, consumers had less confidence in the government’s ability to bring about brisker economic growth. And, at the same time, consumers still had doubts in the government’s ability to stabilize

the price of goods (this component of the CCGI fell 2.3% to 71.6, which is only 0.2% higher than its historic low of 71.4 in May 2007).

Indonesia Consumer Confidence Index October 2007

31 10 2007

Confidence Deteriorates As Low-Income Households Suffer

The Consumer Confidence Index (CCI), which had dipped by 2.1% in August, retreated further in September, losing 1.9% to a level of 83.0.

Unlike in August when the decline in the CCI owed much to apprehension over the short-term outlook, September’s decline was mostly driven by less favorable assessments of present-day conditions (the Present Situations Index (PSI) fell by 2.4% to 63.8). This is of some concern since further declines in this index in the months ahead may reflect softening growth in the economy.

Rising prices of basic foodstuffs continue to dampen consumers’ assessments of current economic conditions. Moreover, consumers are also having to grapple with other problems such as higher education costs in the new academic year, kerosene fuel scarcity and stubbornly high cooking oil prices. These factors are behind the 2.4% decline in the PSI. Meanwhile, looking ahead, consumers are also less upbeat: the Expectations Index (EI) sagged by 1.6% from 98.9 in August to 97.4 in September.

Buying intentions deteriorated slightly in September. According to the survey, the percentage of respondents planning to buy durable goods fell from a high of 28.9% in August to 26.2% in September. Rising foodstuff prices, weaker income gains, and growing concerns over the health of the economy were all contributing factors.

Yet despite consumer concerns over rising prices and unemployment, confidence in the government held up. In the latest survey, the Consumer Confidence in the Government Index (CCGI) rose 2.2% to 100.2. Nonetheless, it is still worth noting that consumers were more dissatisfied with the government’s ability to stabilize the price of goods (this component of the CCGI fell 2.5% to just 78.7 in September).

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.