Retail index down in January and February

Retail index down in January and February

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The sales volume of grocery goods contracted in January and
February, as indicated by a decline in the retail index,
according to a bimonthly survey by ACNielsen Indonesia.

The consulting firm said that the January and February retail
index fell to 103 percent, from 109 percent in November and
December.

"There are two reasons for this decline. Firstly, consumers
are adjusting their spending to take account of increases in fuel
prices, electricity and other basic commodities.

"Secondly, widespread flooding in January and February
seriously disrupted distribution logistics in several areas of
Java and reduced the number of shops in some areas," ACNielsen
Indonesia managing director Farquhar Stirling told The Jakarta
Post on Monday.

However, he said there were some indications the March and
April index would rebound as many retailers had reported
increased sales for the period.

"The good news is that the January and February index remained
higher than the index before the 1997 crisis. It means that
consumer buying power has continued at a good level," he said.

The index bottomed out at 84 percent in early 1999, but it
then started bouncing back.

The ACNielsen survey was carried out between January and
February, covering 5,000 retailers, ranging from supermarkets to
small shops in urban and rural areas in various provinces, except
Papua and Maluku.

It contained about 60 categories of fast-moving consumer
goods, such as noodles, milk, cigarettes, shampoo, detergent and
vitamins.

The survey did not include relatively durable goods such as
clothes, electronic items, toys, rice, meat and cars.

ACNielsen argued the 60 categories represented the daily
products bought by Indonesian people at various income levels.

Company director Teguh Yunanto, who coordinated the survey,
said food products had shown good growth in the first two months
of this year, but cigarettes were on the down side.

"Food products such as milk, noodles and biscuits did well in
the first two months, thanks to Chinese New Year," he said.

"But cigarette sales were poor, as the distribution chain was
hit by flooding."

The government has said consumer spending will be the main
driver of economic growth this year, with exports and investments
expected to slow due to the global economic downturn.

The government has forecast an economic growth of 4 percent
this year.

But some economists have said household consumption will
remain low this year because many people had lost their job as a
result of the economic crisis.