JAKARTA (ANN/THE JAKARTA POST) – Bank Indonesia’s (BI) early findings reveal a modest uptick in retail sales for the previous month despite a significant surge in consumer confidence.
According to BI’s survey, the retail sales index (RSI) is anticipated to register a marginal year-on-year growth of 0.1 per cent, reaching a reading of 243.2 in April compared to 242.9 in the corresponding period last year.
In monthly comparisons, the forecasted RSI for April signals a 3.3 percent rise from March’s 235.4 points.
By contrast, March, the month that most of Ramadan fell in this year, saw significant increases of 9.9 per cent year-on-year (yoy) and 9.3 per cent month-to-month (mtm), according to the survey results released by BI on Tuesday.
The Muslim fasting month generally provides a boost for consumer spending.
The projection for April was mainly supported by annual sales growth for three distinct product categories, namely those of spare parts and accessories with 6.1 per cent, vehicle fuel with 1.4 per cent and food, beverages and tobacco with 1.3 per cent, according to BI’s analysis of the survey results.
All other product categories, meanwhile, experienced an annual contraction.
BI spokesperson Erwin Haryono said in a press statement released together with the survey results that the Islamic festive season of Aidilfitri had “pushed” sales growth for food and beverages.
Erwin also noted that increased activity during Ramadan, together with merchants offering discounts, had provided a boost for retailers of clothing in March, pushing sales up 20.6 per cent yoy, but just to contract 16.4 per cent yoy in April.
The latest RSI survey, which is based on questioning of retailers in March, also shows that the respondents were less than optimistic about the short-term outlook as they expected a dip in revenue over both the three-month and the six-month time horizon, or till June and till September, in line with BI’s hawkish monetary policy that makes loans more expensive.
Statistics Indonesia (BPS) announced at a press briefing on May 2 that headline inflation declined marginally to three per cent in April from 3.05 per cent in the preceding month.
BI has an inflation target of 2.5 plus/minus 1 per cent for 2024, and consumer price index (CPI) growth has so far stayed well clear of the upper limit.
Despite relatively stable inflation over the past year, the central bank hiked its key interest rate, the BI Rate, to 6.25 per cent in April in a bid to avoid imported inflation prompted by the rupiah’s weaker exchange value against the dollar.
All else being equal, the higher rate should in theory push down inflation.
Meanwhile, the consumer confidence index (CCI) made a marked jump to 127.7 points in April from 123.8 points in the preceding month, according to a separate survey released by the central bank on Monday. Last month’s figure also came in higher than the 126.1 points logged in April of 2023.
Improvement was seen in both the current economic conditions subindex, which covers respondents’ assessments of their income, job availability and planned purchases of durable goods, as well as in the consumer expectation subindex, which reflects how respondents expect the economy to play out over the next six months.
Those two subindexes together make up the headline CCI, and each is measured across three matrices, all of which improved in April, in line with Indonesia’s overall solid economy that beat expectations with annual growth of 5.11 per cent in the first quarter.
BCA chief economist David Sumual told The Jakarta Post on Tuesday that the RSI and CCI typically moved in the same direction, unlike what happened in April, where the latter jumped high while the former stagnated, or in March, where the CCI barely grew while the RSI shot up.
He noted that the CCI survey was “based on respondents’ sentiment”, while the RSI was constituted on real sales data, hence the possibility of the two getting sporadically out of sync.
David said the CCI respondents’ sentiment might have been hyped up somewhat in April by yearly Idul Fitri bonuses.
The positive sentiment notwithstanding, David said he found through his own recent research that people were using less of their money for retail spending these days and more for leisure and investment.
The fact that people were less inclined to spend might explain why BI projected low retail sales growth in April, despite the jump in the CCI, said David.
Bank Permata chief economist Josua Pardede told the Post on Tuesday that the April retail sales figure was a mere projection based on preliminary data that may still change, as it did for March, where BI initially forecast just 3.5 per cent yoy growth.
He said, however, that the slowdown in April sales was likely due to fewer working days that month thanks to the Aidilfitri holidays, which for many spanned more than a week.
As for the CCI, Josua stressed that all of its components went up in April in line with the release of investment and economic growth data as the “drivers behind the increase in consumer confidence”.
