Indonesians were more confident about the economy in March, according to a central bank survey released on Wednesday.
Perry Warjiyo, Bank Indonesia’s director of economic and monetary research, said the Consumer Confidence Index, which reflects the level of optimism toward the economy, was 107.4 points in March, up 2.1 points from February.
“Domestic economic stability, decreasing prices of goods and expectations for higher salaries for public servants in April are factors behind the optimism,” Perry said.
The index was based on a poll of 4,600 households in 18 cities. A rating higher than 100 means consumers are optimistic.
Perry said Bank Indonesia expected inflation in March to be tame, with prices expected to rise only 0.07 percent month over month and 3.65 percent year over year, thanks largely to a slight drop in rice prices as the harvest season began. “The figure confirmed the central bank’s expectation that inflationary pressure remains insignificant during the first half of 2010,” Perry said.
Bank Indonesia has forecast full-year inflation of 4 percent to 6 percent.
Bank Indonesia’s Price Expectation Index for the next three months dropped to 155.1 points in March from 160.2 in February, with consumers saying they expected to see little inflation until the start of Ramadan in August.
Several economists have predicted annual inflation in March of 3.34 percent to 3.55 percent, down from 3.81 percent in February, due to the rice harvest helping to stabilize food prices.
Purbaya Yudhi Sadewa, chief economist at the state-run Danareksa Research Institute, said consumer sentiment is greatly affected by retail prices, with lower prices creating a brighter outlook. “The price of rice and other staple foods are decreasing this month because March is the harvest season,” Purbaya noted.