Consumer confidence highest in three years

The Jakarta Post ,  Jakarta   |  Thu, 06/04/2009 12:50 PM  |  Business

Indonesian consumers are increasingly more confident about the economy after seeing that food prices are stabilizing, while more job opportunities are opening up, a survey says.

A survey report published Wednesday by Danareksa Research Institute (DRI) revealed that the Consumer Confidence Index recorded by the institute rose by an impressive 6.3 percent to 89.6 in May, its highest level since August 2006.

Fewer consumers surveyed by DRI said that high foodstuff prices were a concern, down from 61.9 percent in April to 57.3 percent in May.

"This is a notable finding since spending on foodstuffs takes up a considerable portion of household budgets in Indonesia," DRI analyst Purbaya Yudhi Sadewa said in a statement.

The easing concerns over high foodstuff prices, he said, will in the end help to bolster overall consumer confidence.

Consumers gave better assessments on both national and local economic conditions as well as on the current state of the job market. An index component measuring consumer sentiment toward the future rose by a less dramatic 3.9 percent to 102.5 on hopes that stronger economic growth would create more jobs.

Buying intentions for durable goods also strengthened last month with 24.9 percent of consumers polled saying that they intended to buy durable goods over the next six months. This is higher than the 23.8 percent in April.

"Declining interest rates, greater job security and improving national economic conditions are helping to support consumer spending. This bodes well for economic growth as around two-thirds of the economy constitutes consumer demand," Purbaya said.

With this positive outlook on the economy, consumer confidence in the government consequently rose further, climbing 5.4 percent to 113.6.

"Confidence in the government is now at its highest level since March 2005 - a strong sign that consumers believe that the current administration is governing well," Purbaya said.

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