Today the indonesian central bank Bank Indonesia realeased the consumer confidence index (CCI) for June 2008.
Consumer confidence index was reported at 79.1, down from 82.4 in May 2008. This is the lowest level since October 2005. In June 2007 the consumer confidence index was still at 95.8. Regionally consumers in DKI Jakarta (68.1), Denpasar (67.1) and Surabaya (63.3) were most pessimistic, while consumers in Makassar (110.2), Samarinda (97.3) and Pontianak were most optimistic in Indonesia.
This survey shows a gloomy future for Indonesia especially after new car sales rose by 39% and Toyota Astra, the market leader in Indonesia, sold 41% more cars in June 2008. Southeast Asia’s largest economy depends heavily on consumer spending. But after inflation reached double digit rates and the third straight key interest rate increase in three months consumers worry about their future.
Consumer Survey-Bank Indonesia (CS-BI) is a monthly survey that has been conducted since October 1999. By significance level of 99%, the sample has sampling error of 2%. Balance Score Method (net balance + 100) has been adopted to construct the index, whenever the index is above 100 points indicates an optimism (positive responses) and vice versa.
Today the Indonesian central bank, Bank Indonesia, increased again the key interest rate by 25 basis points to 8.75%. This was third rate increase after Bank Indonesia increased their rates to 8.25% in May 2008 and 8.50% in June 2008.
Bank Indonesia, headed by Governor Boediono wants to avoid second round price effects and hopes to keep inflation below 12.5% in 2008. On July 1st, the National Statistics Office reported that consumer prices rose by more than 11%, based on a new consumption pattern. Without this modification consumer prices would have risen by 12.8% in June 2008.
On August 5th, 2008 Bank Indonesia will hold its next regular monthly monetary policy meeting.
Today the National Statistics Office (Badan Pusat Statistik) reported that consumer prices rose at 11.03% in June 2008. In May 2008 the Indonesian Government increased fuel prices dramatically pushing consumer prices by 10.4%.
Dr. Rusman Heriawan, Director General of BPS presented the latest figures in Jakarta. Starting with June 2008, CPI will be based on a consumption pattern obtained from 2007 Cost of Living Survey in 66 cities (2007=100). Without this modification inflation would have been reported at 12.8% for June 2008.
Especially poor people were hurt by higher food and fuel prices. In Indonesia more than 15% of the population live on less than USD 20.- a month.
The increase in consumer prices make it more likely that Bank Indonesia will increase key interest rates at the next meeting on July 3rd, 2008 to fight inflation.
