Consumer index retreats after slight gains

JAKARTA (JP): Danareksa's Consumer Confidence Index in retreated to 101 in February from 103.3 in January giving up most of its gains eked out in the last couple of months as a result of falls in the present situation and expectations indices.

The Danareksa Research Institute said on Monday that the index measuring the people's assessment of the present economic situation fell slightly to 82.5 from 83.0, suggesting that the earlier gain was a knee-jerk reaction to a boost in cash flows in January.

The index that measures people's expectations on their own economic position over the next six months dropped 3.1 percent on soaring uncertainty over where the country is heading, the institute said.

It said that the people were also more uncertain about the present situation partly due to the deterioration in the labor market, with jobs becoming more difficult to find.

With security threats at the forefront of their expectations, respondents anticipated a grim outlook for the overall economy, the institute said.

"Consumers are less confident in their family income expectations and this prompts them to save more of their current income as part of a contingency buffer," it added.

As nobody is able to build a lucid and reliable picture of what the future of the country, consumers are left with little choice to minimize the consequences of the possible worsening of the economy. This situation has also forced them to reduce their spending on durable goods.

The institute said the proportion of the consumers' spending for durables surveyed during the last six months dropped from 33.7 percent in January to 32.13 percent in February.

As politicians' risky behavior continues to snowball, with force and violence becoming a normal way to resolve conflicts, consumers opt to shun risks from heightening political temperatures by getting financially prepared for safety reasons.(05)