Indonesia's Consumer Confidence Slightly Weaker in February 2016
Indonesia's consumer confidence regarding the country's macroeconomic conditions weakened in February 2016. Bank Indonesia's Consumer Confidence Index dropped 2.6 points to 110. The survey indicates that there are two reasons that explain this decline. Firstly, lower optimism about current economic conditions of Indonesia and, secondly, lower optimism regarding job availability over the next six months. Bank Indonesia's monthly survey is based on data provided by 4,600 households in 18 Indonesian cities across the archipelago.
The survey also showed that Indonesian consumers expect to see inflationary pressures rising by May 2016, especially for food products. This is a seasonal phenomenon. Ahead of the holy Islamic fasting month of Ramadan and Idul Fitri prices tend to rise amid rising demand (Indonesian Muslims usually organize dinner parties in the evening to "celebrate" the daily breaking of fasting). The survey was conducted before state-owned oil & gas company Pertamina announced it plans to lower fuel prices (Premium) in April. This move would surely ease inflationary pressures in Southeast Asia's largest economy and will most likely improve consumers' optimism regarding inflation.
Indonesian consumers' lower optimism regarding job availability is likely caused by recent news stories about layoffs in Indonesia's textile and footwear sectors.
A reading above 100 points indicates optimism. The last time Bank Indonesia's monthly survey showed pessimism (a reading below 100) was in November 2015.
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