The retail sales index (RSI/IPR in Indonesian) is projected to slip 4.6 percent to 212.7 points in July, from 222.9 points the previous month, according to the data that BI released on Wednesday.

The country logged an RSI of 223.5 points in May, meaning retail sales have been in a consistent decline since hitting a high of 242.9 index points in April.

The continuous dwindle was largely caused by decreasing demand for food, beverage and tobacco (FBT), followed by demand for cultural goods and recreation and then motor fuel. The central bank attributed the declining demand to the ending in June of school holidays and the Ramadhan-Idul Fitri holiday season, which had previously spurred demand.

The yearly RSI is projected to increase 6.3 percent to 212.7 points, from 200.2 points last year, driven by increased consumer spending on FBT, clothing and spare parts and accessories.

“The annual performance of retail sales is forecast to remain strong in July 2023,” BI spokesperson Erwin Haryono said in a press release on Wednesday.

Respondents of the RSI survey believed that inflation would continue to fall until September, but then rise in December.

This in line with the country’s annual inflation, which slowed in July to a six-month low of 3.08 percent, according to data released by Statistics Indonesia (BPS).

The central bank has set this year’s inflation target at 3 percent, plus or minus 1 percent, with inflation inching toward the country’s lowest range last month. BI projects that inflation could be much lower next year, in a range of 2.5 percent, plus or minus 1 percent.

Meanwhile, the consumer confidence index (CCI/IKK) slipped to 123.5, marking two consecutive months of decline since reaching 128.3 in May, though that figure is still above the 100-point threshold to indicate consumer optimism.

The latest BI data on economic indicators also show that consumers perceived the economic conditions in July to be worse than six months ago, particularly as regards current incomes and jobs.

Meanwhile, consumer expectations for the next six months from July generally fell, particularly in terms of jobs and business activities.

The index is partly based on consumer perceptions about inflation and economic activities, both of which have been improving in the country.

BPS data on Monday showed that Indonesia once again beat market estimates on economic growth, booking a rise in GDP of 5.17 percent year-on-year (yoy) in the second quarter, thanks to strong domestic demand.

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