Consumer index down in August: BI

The Jakarta Post, Jakarta

The consumer confidence index -- which measures the people's perspective on the economic situation -- declined in August, Bank Indonesia said over the weekend in its latest report.

The August index was lower at 76.3 from 81.8 posted the month earlier.

The rising pessimism reflected people's declining confidence in the prospect of family income, the central bank said.

The report came amid improving macroeconomic indicators as inflation has eased, interest rates are down and the rupiah has strengthened.

Analysts, however, have said that the improving macroeconomic picture has yet to translate into higher investment activities. Investment is seen as crucial to help push economic growth to be able to generate more jobs for the millions of unemployed.

The high unemployment rate in the country is weakening people's purchasing power.

The Bank Indonesia report said that the index that shows the number of consumers who think that buying durable goods was now the right time also fell to 65.2 percent from the previous month's 70.9 percent, something that could weaken consumer spending.

While the report did not elaborate on what impact it could have on the economy, the decreasing consumer confidence would prove costly to the economy, which heavily relies on domestic consumption. The government expects the economy to grow by 4 percent this year, with domestic consumption as the main growth engine amid weak exports and investment performance.

The survey also revealed that people's expectations of the economy in the next six months to 12 months were lower, dropping from 107.2 in July to 90.5 percent in August.