Fri, 08 Sep 2006

Consumers feeling more confident

The Jakarta Post, Jakarta

After having their purchasing power curtailed by last year's fuel price hike, consumers in the country now appear to see brighter prospects for the future.

The latest survey by Australian-based Roy Morgan Research shows the confidence index of Indonesia consumers in the period from April to June had improved slightly by 1.5 points to 109.3, from 107.8 in the previous quarter.

The index had fallen to 105.2 during last year's final quarter, after the October fuel price hike. It was at 121.9 in 2005's second quarter.

The main driver behind the index's latest marginal rise was the amount of Indonesians who consider now is a good time to buy major household items, which is up by 2 percentage points to a current 22 percent. Roughly the same percentage of Indonesians also said they were better off than last year, although another 37 percent still said otherwise.

"Consumer demand for most products and services is on the road to gradual recovery. Deeper analysis reveals where growth will come from in the coming months," Roy Morgan regional director for Asia, Debnath Guharoy, said in a statement.

The quarterly survey of 6,233 respondents also showed improving expectations of good economic conditions both in the short term and in the long run, with 61 percent expecting to be better off financially over the next year, and 82 percent over the next five years.

Other consumer confidence indices had also shown similar rising trends, reflecting an improving view of the country's economy.

Danareksa Research Institute's monthly survey of 1,700 respondents in July showed an overall consumer confidence index rising 3.9 percent to 88 points, its highest level since September last year.

The confidence index on the current economic situation increased 5 percent to 66.3, with consumers in the country perceiving an improvement in employment compared to the previous month. The index on upcoming economic prospects, meanwhile, was also up 3.4 percent to 104.2, as consumers expected further easing of interest rates.

The central bank had in July cut its key rate by a quarter percentage point to 12.25 percent, before twice lowering it again by half a point each in August and September to reach 11.25 percent at present.

Bank Indonesia's own consumer confidence index was on the rise, although it was still below the 100-point confident bar. The monthly index from a survey in July of 4,365 respondents was up 4.4 points to 95.5, compared to the previous month.