May Confidence Lower Due to Economic and Job Concerns

By Muhammad Al Azhari on 10:20 am Jun 19, 2013
Category Business, Economy

A Bank Indonesia survey has found household consumption in May slowed as consumers worried about a possible economic slow down and a future lack of jobs.

The central bank’s Consumer Confidence Index, released on Monday, fell 2 points in May to 111.7. The survey gauged the attitudes of respondents from 4,600 households in 18 cities.

“The weakening optimism of consumers is expected to continue in the next six months, especially influenced by the falling confidence over job availability,” Bank Indonesia said in a statement on Monday.

Consumers expected inflationary pressures ahead of Ramadan, the Muslim fasting month, and Idul Fitri, a holiday marking the end of Ramadan, the survey said. Ramadan is set to start on July 8.

Indonesia’s economy expanded by 6.02 percent in the first quarter of 2013 from the same period a year ago, slower than the 6.5 percent year-on-year expansion in the fourth quarter of last year. The government has set a target in its 2013 revised budget of a 6.2 percent expansion this year.

Consumer confidence may be shaken further by the government’s plan to raise the price of subsidized petrol and diesel, which was approved by lawmakers on Monday.

Premium — the subsidized low-octane petrol — and diesel is currently being sold for Rp 4,500 a liter, but under the plan, the price of premium will rise to Rp 6,500 a liter and diesel to Rp 5,500 a liter.

The fuel-price increase, for which a start date is not yet set, was needed to curb the cost of subsidies, which on higher consumption and world oil prices threatened to soar to Rp 297 trillion ($30 billion) this year. The House of Representatives approved a budget cap on fuel subsidies of Rp 199.9 trillion, higher than the Rp 193.8 trillion set out in the original budget.

Fuel pricing is a sensitive issue in Indonesia, because of the impact of fuel prices on the cost of living.

On Monday there were national protests against the government’s plan, with violent demonstrations in Medan in North Sumatra, Ternate in North Maluku and Jambi as protestors clashed with security forces.