Consumer confidence rises in four consecutive months

Consumer confidence rises in four consecutive months

The Jakarta Post, Jakarta

The consumer confidence index rose in May for the fourth
consecutive month in a row, as consumers are more optimistic with
the ongoing upturn in the Indonesian economy, a survey said.

The survey by the Danareksa Research Institute shows that
consumer confidence index (CCI) rose 0.5 percent to 99.3 percent,
with the present situation index (PSI) moving up to 82.7 from
81.3 in April.

The increase in the CCI shows that "consumers are more
optimistic that the recovery process underway is the driving
force of growth to converge and reinforce one another," the
survey said.

However, the expectations index (EI) slid to 111.7 from 111.9
to underline corrections of exorbitant expectations on the speed
of economic recovery that will take time to bear fruit.

Danareksa said the decline was because consumers appear to be
more realistic in their expectations.

"They may have realized that the current vigorous development
will not produce an instantaneous effect on their current
welfare," it said.

Nonetheless, consumers are still confident that the current
economic recovery will lead to a brighter future for their
families and they will benefit from recovery in the economy.

To compile the CCI every month, Danareksa and AC Nielsen
interview at least 1,700 Indonesian households in six main areas
across 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.

The survey also shows that the percentage of consumers
intending to buy durable goods increased from 23.1 percent to 24
percent. The possible pickup in consumer spending will
accordingly set the stage for prices to rise in stages.

Upbeat income predictions, sanguine consumer expectations,
followed by the appreciation of interest rates and the rupiah
have spurred the increase, the survey said.

It might cause inflation as the index gauging sentiment on
expected prices climbed to 176.2 from 171.2.

However, it remains safe as consumers have greater confidence
in the government to keep inflation in check, with the index
figure increasing for the third consecutive month in a row to
119.3 from 117.7 in April, its largest gain since August 2001.

"The government has gained more trust to maintain a secure and
orderly environment, a precondition for the economy to sustain
growth," the survey remarked.