CONSUMER'S CONFIDENCE INDEX SLUMP BY 1.1 PERCENT TO BECOME 91.4 IN MAY

Survey outcome of the Danareksa research institute in May unveiled that consumers confidence again slumped in May 2014. After sinking by 1.0% in the survey of April, Consumers Confidence Index [IKK] again sank by 1.1% to the level of 91.4 in May. The weakening of IKK was for the most part due to declining public appraisal of Indonesia’s economy today. In addition to that, people’s optimism for the prospect of Indonesia’s economy for the next 6 months was seen to decline. Among the people’s anxiety was increasing inflation pressure in the next six months.

               

Even in the last survey, consumers were already worried that inflation pressure would slightly increase in the next six months. Index which measured consumer’s sentiment of inflation rose by 1.5% to be become 191.0 in May. This was the highest level since September 2012. The expectation of price increase was not surprising as price of food seemed to increase through the fasting month which would fall in July. However increasing price of food during the fasting month was normally seasonal. After Idul Fitri, prices of food would tend to turn back to normal.

               

Two main components that constituted IKK in May declined. The component which indicated the present condition [ISS] dropped by 0.5% to 76.4% as consumers gave worse appraisal of the present economic condition. Meanwhile other IKK components showed the condition of the future [IE] also showed downturn of 1.5% to become 102.6 in May. This IE downturn showed the public’s declining optimism of the nation’s economic prospect in the next 6 months.

               

As the public optimism of Indonesia’s economic condition for the next 6 months declined, consumer’s plan to buy durable goods declined in May based on the latest survey, around 33.1% of consumers being surveyed who planned to buy durable goods in the next 6 months dropped against 34.5% in April. The IKK level of May was the lowest since February 2013.

               

Meanwhile consumer’s trust on government’s capability to perform their duties weakened in May. After increasing by 1.7% in April, index of consumer’s confidence in the government [IKKP] dropped by 2.0% to become 80.6 in May. In the last survey, all components constituting IKKP dropped expect the components which showed government’s capability to drive economic growth [index which was uplifted by 2.2% to become 87.7% in May]. The component showing biggest downturn was the component which indicated government’s capability in law enforcement [index which dropped by 6.3% to become 62.4 in May. (SS)

Business News - June 07,2013