Confidence Survey 
Consumer Higher Foodstuff Prices Dampen Sentiment
Consumer Higher Foodstuff Prices Dampen Sentiment
Higher Foodstuff Prices Dampen Sentiment
Monday, 08 March 2010 02:08
Consumer confidence weakened further in February as foodstuff prices picked up. In the latest survey, 71.5 percent of consumers cited rising foodstuff prices as a major concern. This compares to a figure of only 61.1 percent in January. With foodstuffs accounting for a large chunk of family expenditure, higher foodstuff prices are a burden for consumers and make it more difficult for them to make ends meet. Dropping 2.1 percent to 85.0 from 86.8 in January, the Consumer Confidence Index (CCI) is now at its lowest level in the last ten months.Both components of the CCI posted declines. The first one – the component measuring consumer sentiment toward current conditions, the Present Situations Index (PSI), fell 4.4% to 65.4, as sentiment on the current state of the economy flagged. The other component of the CCI - the one measuring consumer sentiment toward the future (the Expectations Index or EI) – edged down 0.9% to 99.7, reflecting heightened concerns on how the national economy will perform over the next six months.
In addition, consumers do not foresee any improvements in their family incomes over the next six months. Thus, consumers will be discouraged from purchasing durable goods. This is confirmed in the latest survey as only 23.4 percent of consumers now plan to purchase a durable good in the next six months, or down from 24.8 percent who said the same thing in January.
Consumers believe that inflationary pressures will ease slightly over the next six months. Our latest survey shows that the index measuring consumer sentiment toward inflation edged down 1.1 percent to 186.5. In part, at least, the decline in this index may be attributable to expectations that foodstuff prices will fall due to greater supply of foodstuffs because of the onset of the harvesting season in February.
Confidence in the government's ability to carry out its duties continued to weaken. In February, the Consumer Confidence toward the Government Index (CCGI) retreated 1.29 percent to 98.3, its lowest level since November 2008. This decline was attributable to the fall in the component measuring sentiment toward the government's ability to stabilize the prices of goods (down 8.2 percent) and the component measuring sentiment toward the government's ability to spur economic growth (down 6.1 percent).
About DRI Consumer Confidence Survey
DRi's Consumer Confidence Survey, which is based on a representative sample of at least 1,700 Indonesian households across six different main areas, is conducted by Danareksa Research Institute and reported every month. This survey is based on face-to-face interviewing. The sample for this national survey is scientifically selected to accurately represent Indonesian consumer characteristics, demographically and economically.
Consumer confidence is designed to measure the mood of consumers towards buying, and thus help to predict buying patterns. Although other economic indicators are also predictors of buying patterns, consumer confidence tends to be available sooner than these indicators. Consumer confidence is also designed to capture the effect of events that may affect buying patterns, but are not immediately reflected in other economic indicators. The CCI is also one of the components in the leading indicator index Ri is establishing as a guide to predicting where the Indonesia economy is heading.
In the consumer confidence survey, respondents can answer seven questions. For each question, respondents can answer pessimistically or optimistically. For example, a respondent can say that s/he is pessimistic or optimistic towards the present economic condition. The minimum value if these indexes is “0”, and that is when all respondents give pessimistic response on all seven questions. The maximum value if these indexes is “200”, and that is when all respondents give optimistic response on all seven questions. “100” is the middle value. If the index is below “100”, it can be inferred that negative (pessimistic) response outnumbers the positive (optimistic) response. The usefulness of the index is in comparing changes over time rather than looking at an isolated month.
For more information please contact:
Danareksa Research Institute, Jl. Medan Merdeka Selatan 14, Jakarta 10110
Tel. (62-21) 350 9777/888, Asti Suwarni (ext 3608) or Martin Jenkins (ext 3609)
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