Indonesia consumer confidence expected to recover next month

According to foreign media reports, Indonesia's consumer confidence index is expected to recover next month.

According to data from Bank Indonesia, the Consumer Confidence Index (IKK) recorded in August 2021 was 77.3, a decrease from 80.2 in July 2021.

The reason for the decline in CPI (Consumer Price Index) in August 2021 is mainly due to the low purchasing power of residents and low consumption desire, especially among the middle and lower classes. Bhima Yudhistira, director of the Indonesian Center for Legal and Economic Studies (CELIOS), said, "Despite the relaxation of the PPKM (micro-community restrictions) policy implemented by the government, IKK still experienced a sharp decline. This is due to the low consumption desire of the middle and lower classes, while the upper middle class still tends to wait and restrain spending, and even tends to increase savings."

Bank Permata deputy chief economist Josua Pradede said the decline in IKK in August reflected consumer confidence at the beginning of the month, when cases of infection with the Delta variant were still relatively high and the government had not relaxed the PPKM and Level 4 security alert policies.

In addition, Josua Pradede also mentioned that due to the government's emergency implementation of the PPKM policy, people's consumption desire has been affected, and IKK has fallen to a more pessimistic level. Coupled with restrictions on residents' consumption types, it may cause slow economic growth in the third quarter of 2021.

At the same time, Bank Indonesia also released a set of data showing that Indonesia's current economic index ( IKE) dropped from 67.1 in July 2021 to 59.4 in August 2021. The decline in the consumer price index is mainly concentrated in two aspects, one is the monthly consumer expenditure in the range of 30,000 to 4 million rupiahs/month, and the other is the age group of residents over 60 years old.

Meanwhile, Bank Indonesia noted that the Consumer Expectations Index ( CEI) rose, from 93.2 in July 2021 to 95.3 in August 2021, but remained in the pessimistic range.

At present, the Indonesian government has relaxed restrictions on community activities, increased people's mobility, and prompted consumers to increase their expectations for income and future business activities. As epidemic prevention and control continues to strengthen, I believe that the Indonesian consumer market will regain vitality in the future.

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