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Indonesian Consumers Grip Wallets Amid Surge in Power Costs

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Consumer confidence in Indonesia has declined as the looming rise in electricity costs prompts consumers to delay the purchase of durable goods, a central bank survey has shown.

Bank Indonesia’s report, released on Friday, showed that the Consumer Confidence Index, which measures consumers’ sentiment towards economic conditions, slipped to 116.2 points in January from a record-equaling 116.4 in December. The survey was based on interviews with 4,600 households in 18 cities across the nation. A reading of more than 100 points means consumers in general are bullish about the economy. “[Consumer confidence] is being overshadowed by the electricity tariff rise,” the central bank said in a statement accompanying the survey results.

Electricity prices are scheduled to rise 15 percent this year, starting with a 4.3 percent increase at the start of the year and further rises every three months. The rise has long been flagged by the government, which is attempting to curb spending on state subsidies for energy consumption. An increase in other energy prices has also been considered. The Bank Indonesia study included several subsidiary measures of consumer sentiment. An index that measures consumers’ likelihood of buying durable goods declined by 7.3 points to 103.6 points.

But consumers remained optimistic about Indonesia’s economic conditions for the next six months. An index that measures consumer optimism for job availability rose 2.1 points to 96.2 points, while one measuring perceived difficulty of doing business improved by 2.5 points to 127.3 points in January. A rising interest in entrepreneurship and the easier securing of financing from banks were stated as key reasons for the rising optimism. The survey found that consumers believe inflationary pressures will relax in the next three months.

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