According to Bank Indonesia’s (BI) latest survey, retail sales in February were up an estimated 2.6 percent year-on-year (yoy) but down 1.4 percent when compared to the preceding month.

The decline comes on top of the 0.6 percent month-to-month (mtm) drop registered in January, after the January data was revised down from preliminary figures that had pointed to a 1.7 percent monthly increase.

“[These February] estimates are better than the previous months’ as they were in a contraction phase,” BI spokesman Fajar Majardi wrote in a press statement released on Thursday.

Clothing is estimated to have booked the highest sales growth last month with a 10.8 percent yoy increase, followed by the food, beverages and tobacco category at 5 percent.

The preliminary data point to declining sales across all other categories, with the biggest drop seen in automotive fuels, which were down 8.8 percent from the same period a year ago.

Sales of electronics have been declining for years in Indonesia, with full-year drops registered in 2021 and 2022.

As reported last month, Samsung was the only vendor that kept last year’s decline in shipments out of the double digits, experiencing a decline of 5 percent in Indonesia. The other top five brands reported drops of 15 percent or more, with Xiaomi faring the worst with minus 37 percent.

Read also: RI smartphone market tightens as Samsung pushes foldable devices

Sales of household appliances are also estimated to have declined in February, with the preliminary BI data pointing to a continued downtrend that began in 2021.

The monthly decline in overall retail sales in January and December was due to a “seasonal factor”, said state-owned Bank Mandiri economist Faisal Rachman, adding that the contraction was normal given the usual rush of retail activity in December for Christmas and New Year’s Eve.

“So, January will [typically] see a decrease because of a retail normalization. […] That’s still in line with the pattern; retail activity will dwindle before it goes up again during Ramadan and Lebaran,” Faisal told The Jakarta Post on Thursday.

Read also: Retail sales to rebound, as consumer confidence rises: BI surveys

The chief economist of publicly listed Bank Permata, Josua Pardede, noted that holiday seasons almost always contributed to retail sales, especially Ramadan and Idul Fitri.

“The [Idul Fitri] holiday bonuses and [mudik (exodus)] are projected to increase, which would push consumer spending up,” Josua told the Post on Thursday.

Meanwhile, the consumer confidence index (CCI) diminished by 0.6 points to 122.4 points in February, ending a rally that had begun in November last year.

The CCI takes into account public opinion about personal income, employment prospects and the macroeconomic environment, all of which affect people’s propensity to spend, which in turn affects the nation's overall consumer expenditure, a key driver of economic growth in Indonesia.

BI spokesperson Erwin Haryono said in a press statement on Wednesday that consumer confidence regarding the overall economy “remains strong", as the CCI remained well in the “optimistic zone”, above the 100-point threshold.

“The maintained consumer confidence in February 2023 was pushed by a rising current economic conditions subindex, especially [thanks to positive views on] employment opportunities and present income,” said Erwin.

The data published on Wednesday showed the current economic conditions subindex rising 0.3 points from the preceding month to a reading of 112.4 in February, thanks to the employment opportunities and present income indexes rising by 1.7 and 0.8 points to 113.8 and 118.5 points, respectively.

Read also: Retail sales stall in December despite strong consumer confidence

However, the subindex for future expectations fell by 1.4 points to 132.5, indicating that consumers felt slightly less optimistic about how the job market and business activity might develop in the six months ahead.

Josua attributed that to the global economic slowdown, which was affecting export activities.

“To maintain domestic economy growth, there needs to be a mix of policies that can support consumer purchasing power,” said Josua, “so that it can [make up for] the decrease in export performance, especially considering the continued normalizing of global commodity prices.”

Lower-income consumers, those spending below Rp 2 million (US$128.30) a month, were less confident about the general economy in February compared to the preceding month but remained optimistic about the job market, the data show.

Younger consumers were more upbeat about the economy, and the older they were, the less confidence they expressed.

“With an optimizing of central and regional [government] spending, along with a stabilization of domestic commodity prices, there’s hope that consumer and business perceptions can be maintained so that national economic growth can become resilient,” said Josua.

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