Jakarta – Consumers in the country are still seeing prices of goods and services picking up, weighing down their purchasing power and overall confidence in the economy, according to the latest survey from the Danareksa Research Institute.
More consumers believe that inflationary pressures will continue peaking over the next six months, with the related index for the monthly survey of 1,700 households in six of Indonesia's main regions rising by 2 percent to a one-year high of 191.2 points in September.
On such inflationary concerns, Danareksa's overall Consumer Confidence Index retreated further by 1.9 percent to the still pessimistic area of 83 points last month, after falling 2.1 percent in August.
The Present Situations Index – gauging consumer confidence on current economic developments – fell 2.4 percent to 63.8 points, while the Expectations Index – the public's perception for the long run – dipped 1.6 percent to 97.4 points.
The survey shows that the proportion of consumers who plan to buy durable goods over the next six months slipped to 26.2 percent in September, from their highest ever level of 28.9 percent a month before.
"Ahead of the upcoming Idul Fitri celebrations, consumers will likely prioritize purchases of clothes and other basic needs, rather than spend money on durable goods," Danareksa economist David E. Sumual said. As has been the case over the past few months, Danareksa's latest survey showed that the major concern among consumers is the rising prices of basic foodstuffs.
"At this time of the year, foodstuff prices tend to soar as sellers jack up their prices amid higher demand during the Ramadhan fasting month," the Jakarta-based research institute said.
"As a result, household finances have come under pressure, forcing consumers to either cut back on other spending, increase debts or use their savings."
People living in rural areas and those in low-income households appear to have been hardest hit by the rising prices of basic foodstuffs.
The decline in confidence among low-income households – those with incomes under Rp 500,000 (US$55) a month – reflects the fact that their finances are particularly sensitive to higher prices of basic goods.
The overall consumer confidence index for rural consumers plunged 6.3 percent to a four-month low of 81.1 points in September.
In contrast, the overall index for consumers living in urban areas managed to improve slightly, edging up 0.1 percent to 83.7.
The central bank has yet to release its similar monthly survey of consumer confidence, which in August saw slight improvements.
Inflation concerns are indeed still high, at least until October, after the Ramadhan fasting month and Idul Fitri holiday. The Central Statistics Agency has reported that consumer prices rose by 0.8 percent in September, up again from 0.75 percent during August.