Number of big spenders increases: AC Nielsen

Zakki P. Hakim, The Jakarta Post, Jakarta

More Indonesian consumers enjoyed a higher purchasing power this year, spending money on various household goods despite rising political tension during the recent seven-month-long general election, according to AC Nielsen's latest survey released on Wednesday.

The consulting firm said that the number of people categorized as "A" spenders (highest category) increased to 12 million, or 15 percent of the population, compared to 12 percent last year, in nine major cities.

"The 'A' consumers in Indonesia is four times that of Singapore's population," said AC Nielsen Southeast Asia managing director Farquhar Stirling at a forum attended by the company's corporate clients.

Singapore has a total population of approximately 2.8 million.

Stirling said this group spent more than Rp 1.75 million (about US$192) each month on various fast-moving goods such as food items, washing and cleansing products, and fuel products, but excluded car and house purchases.

Analysts have said that the relatively mild inflation and low interest rate environment have improved consumers' purchasing power, creating robust domestic consumption, which has been the main engine of the country's economic growth during the past few years as investment and export performances remain weak.

Higher economic growth this year, projected to reach 4.8 percent from 4.1 percent last year, also bodes well for consumers' purchasing power.

The strong domestic consumption has allowed consumer goods producers and retailers in the country to enjoy strong sales growth.

AC Nielsen director of retail and business development Yongky Surya Susilo said that retailers were now projecting double-digit sales growth from an estimated 9 percent average growth this year.

AC Nielsen said the percentage of "B" spenders, that spent between Rp 1.25 million and Rp 1.75 million on household items monthly, had also increased to 15 percent of the combined population in the areas surveyed, from 13 percent last year.

"The 'B' spenders still represent people with a considerably high purchasing power," Stirling said.

The survey showed that the number of people spending below Rp 800,000 per month generally decreased over the year, he said.

"Under the current environment (meager economic growth rate), consumers are still increasing their spending. Imagine, how much more they could spend if the government improved our gross domestic product (GDP) per capita to the average level in the region," he said.

Yongky said that consumers' purchasing power this year would be affected if the new incoming government decides to increase fuel prices later this year as suggested by lawmakers to help reduce soaring the costly fuel subsidy spending.

He said that the government should wait until January.

"Nevertheless, Indonesians are fast in adapting with price increase. They usually need three months at the most to adapt, and then business as usual," said Yongky.