Consumer confidence on November highest in 2003

The Jakarta Post, Jakarta

Consumer confidence in November rose to its highest level in 2003 on the back of soft inflation and large holiday bonuses that allowed consumers to spend generously, a survey said on Monday.

The consumer confidence index rose by 3.6 percent in November to 95.6. Fewer work days and Idul Fitri bonuses enabled consumers to celebrate the Islamic holiday within a more jubilant atmosphere, boosting confidence in the economic recovery.

"People felt much better with regard to what went on during November in their economic environment," the survey said.

It said people felt more sure that the momentum of the current recovery would continue, to generate more jobs and provide them with opportunities for improvement in family income in the six months to come.

The Danareksa consumer confidence survey is based on a representative sample of 1,700 households in six different main areas and on face-to-face interviews.

Consumer confidence is designed to measure the mood of consumers with regard to purchases, which can help predict buying patterns.

Confidence in the security situation boosted consumer confidence in November as people were not concerned about their safety compared with last year, after the Bali bombings on Oct. 12.

"People had little reason to feel downhearted on this joyful occasion, but much to cheer them up, as the environment around them was favorable," the survey remarked.

High levels of optimism in the country's economy have also boosted people's confidence in the government's ability to improve growth, cap rising inflationary pressures, improve deteriorating infrastructure, restore security and order, as well as uphold the law.

The consumer confidence in government index (CCGI) bounced back 6.2 percent to 125.3, the highest since December 2001, with all components rising strongly.

The government's ability to control inflation has contributed to boosting the consumer confidence level, as the index is up by a whopping 11.5 percent.

While positive sentiment has buoyed consumers across the country, the survey said the future economy would still rely on consumer spending levels going upward in a consumer-driven economy.

The survey shows that the appetite of consumers to spend on durable goods has shrunk because people foresee the likelihood of higher interest rates.

People saw that one-month central bank benchmark interest rates (SBI) had clearly moved upward throughout November, dissuading them from committing themselves to any big transactions that called for monthly interest-bearing repayments, until the direction of rates became clear.

Danareksa said any temporary reversal of rate direction, if not finely tuned, might spoil a recovery in the making.