CCI seen to further drop after Bali blasts
CCI seen to further drop after Bali blasts
The Jakarta Post, Jakarta
After rising consistently for the last seven months, consumer
confidence decreased in September owing primarily to price
increases and faces an even bleaker outlook this month following
the horrific Bali bombs attacks, Danareksa Research Institute has
reported.
"In September, that is before the Bali bomb blasts, the CCI
already posted a slide on the heels of price increases sparked by
rising fuel and electricity prices," Danareksa analyst David
Sumual said on Thursday, referring to the consumer confidence
index.
"And now after the incident, the index is expected to further
decrease," he said.
The CCI fell to 98.5 in September compared to 100.4 points in
the previous month, the firm said in its latest report.
The confidence of households with monthly incomes below Rp 1
million was fading and their intention to purchase durable goods
also was dwindling.
However, the sentiments of families with monthly incomes of
above Rp 1 million improved with their will to buy durable goods
unaffected by the price increases and even increasing a little.
"Lower-income families were hit hard by escalating fuel and
electricity prices since the beginning of the year and a fall in
interest income in light of the downtrend in deposit rates," the
report said.
At the beginning of the year, the government raised fuel and
electricity prices to compensate for lower subsidies allocated in
the state budget.
While fuel prices have been adjusted every month with the
international price, electricity rates have been raised every
quarter.
The figures should cast a shadow on hopes for robust domestic
consumption, which is expected to remain the main driver of the
country's economic growth this year amid a slump in investment
and exports.
The survey also showed that in September, the public were more
downbeat about the pace of economic recovery, with their
confidence in recent economic development dropping by 4.5 percent
to 79.4.
The government has targeted four percent growth this year,
primarily on the back of strong consumer consumption.
David predicted that consumer confidence would be further hit
following the Bali bomb blasts, which claimed more than 190
lives.
"In the September survey, you can see that confidence dropped
mainly because of the low-income families who were affected by
the hike in fuel and electricity prices.
"I fear that the index will be much lower in October, because
the Bali incident would not just affect the confidence of low-
income families but also the high-income group. So, I think the
index will continue to drop in October," David said.
The monthly survey was jointly conducted by Danareksa and AC
Nielsen, which interviewed 1,700 households in six main areas in
the country.
The index ranges from a score of zero to 200, with zero
meaning very pessimistic and 200 very optimistic. If the index is
below 100, pessimistic responses outnumber optimistic ones. if
the index is above 100, the reverse is true.