Retail Sales Remain Strong on Robust Private Consumption in Indonesia

Bank Indonesia noted that growth of retail sales were supported by financing facilities that helped consumers to purchase the goods. Strong demand from Indonesia's rapidly expanding middle class is one of the major reasons for foreign companies to try to tap this market, resulting in increasing foreign direct investments in recent years.

Further growth of retail sales in Indonesia is expected to slow in February and March but will pick up again in April when the legislative election is held on 9 April 2014. This event is estimated to boost consumption as well as to increase the money flow in society.

The survey also indicated that price pressures will reduce in three to six months from now. This expectation is based on Indonesia's easing inflation pace. After increasing prices of subsidized fuels in June 2013, inflation accelerated to nearly nine percent (yoy). However, since September 2013, inflation has been under control. According to the latest data of Statistics Indonesia, inflation moderated to 7.75 percent in February 2014 (yoy) from 8.22 percent (yoy) in the previous month. This trend is expected to continue in the months ahead.

In 2014, Indonesia's gross domestic product (GDP) is expected to grow between 5.6 and 6.0 percent, roughly similar to last year's result of 5.78 percent.

Inflation in Indonesia:

Month	Monthly Growth           2013	Monthly Growth           2014
January	1.03%	1.07%
February	0.75%	0.26%
March	0.63%
April	-0.10%
May	-0.03%
June	1.03%
July	3.29%
August	1.12%
September	-0.35%
October	0.09%
November	0.12%
December	0.55%
Total	8.38%	1.33%

	2008	2009	2010	2011	2012	2013
Inflation (annual percent change)	9.8	4.8	5.1	5.4	4.3	8.4

^{Source: Statistics Indonesia}

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