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.