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Fragile economic improvement must not be disrupted: Retail association

Jakarta Post - June 17, 2021

Rifki Nurfajri, Jakarta – Improving retail sales in recent months should not be taken as a sign that the industry is out of the woods, as consumer spending remains vulnerable to mobility restrictions, a retail association has warned.

"During Ramadan, there is always a huge increase in retail activity. Then it will decrease in the months after that," Indonesia Retail and Tenant Association (Hippindo) advisory board member Tutum Rahanta told The Jakarta Post on Thursday.

The assessment comes just a few days after Bank Indonesia (BI) published its latest real sales index (RSI), which increased 17.3 percent month-to-month and 15.6 percent year-on-year (yoy) to a reading of 220.4 points in April, the highest level in a year.

With a further increase predicted for the month of May, the RSI points to strong growth in consumer spending in the second quarter of 2021.

The increase was driven by sales of clothing, fuel and spare parts, with the clothing RSI up 55.2 percent yoy. Yet, other categories, including telecommunication tools, household goods and cultural goods, saw a contraction in sales, with the telecommunication tools RSI down 31.1 percent yoy.

The overall increase was attributed partly to rising demand in the fasting month and by many discounts.

During Ramadan, the RSI usually shows an increase because of increased social and religious activities, but the rise in April this year was lower than in the pre-pandemic fasting months since 2017.

Tutum said the retail performance in the months ahead would depend heavily on whether the government imposed or eased mobility restrictions. He added that the fragile economic improvement should not be disrupted and that adherence to prevailing rules, along with increased vaccination, was enough to curb the virus spread and protect the economic recovery.

The RSI is part of BI's retail survey and involves 7,000 retailers in 10 major cities.

Source: https://www.thejakartapost.com/news/2021/06/17/fragile-economic-improvement-must-not-be-disrupted-retail-association.htm