CONSUMER SURVEY CONSUMERS OPTIMISM HAS INCREASED. A. Consumer Confidence. A1. Consumer Confidence Index JUNE 2018

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CONSUMER SURVEY JUNE CONSUMERS OPTIMISM HAS INCREASED OPTIMISM The Bank Indonesia showed that consumers were more upbeat on economic dynamics in June.

2 in the second quarter of, rising from 123.4 in the previous period and from 124.0 in the same period one year earlier. The CCI gains come amidst a bump of 4.

1 CONSUMER SURVEY JUNE CONSUMERS OPTIMISM HAS INCREASED OPTIMISM The Bank Indonesia showed that consumers were more upbeat on economic dynamics in June. The Consumer Confidence Index (CCI) stood at a level of in the reporting period, up from the month earlier. On a quarterly basis, the CCI averaged in the second quarter of, rising from in the previous period and from in the same period one year earlier. The CCI gains come amidst a bump of 4.7 points in the Current Economic Condition Index (CECI), driven by the Spending on Durable Goods Index, coupled with an increase of 1.3 points in the Consumer Expectation Index (CEI), edged up by the Job Availability Index. DURABLE GOODS INFLATION The survey also revealed that respondents predicted milder inflationary pressures in the next 3 months (September ) as demand returns to normal in the wake of Eid-ul-Adha, indicated by a decline in the 3-month Price Expectations Index (PEI) from last month to A. Consumer Confidence Consumers were more optimistic in June. A1. Consumer Confidence Index The Bank Indonesia showed that consumers were more upbeat on economic dynamics in June compared with conditions in the previous period. The CCI stood at a level of in the reporting period, up from the month earlier. The gains come amidst a bump of 4.7 points in the CECI to coupled with an increase of 1.3 points in the CEI to On a quarterly basis, the CCI averaged for the second three months of, rising from in the previous period and from in the same period one year earlier (Graph 1). Respondents from nearly all spending and age brackets reported CCI gains in June, most significantly by those spending Rp3-4 million per month (Graph 2) and those aged (Graph 3). Regionally, consumers in 14 surveyed cities confirmed an increase in the CCI, particularly in Makassar (19.2 points) followed by Palembang (14.6 points). 1

In June, consumers were more optimistic on prevailing economic dynamics compared with conditions in the previous period, as reflected by a 4.

2 Graph 1 Consumer Confidence Index Graph 2 CCI by Spending Level Graph 3 CCI by Respondent s Ages A2. Current Economic Condition Index Consumers were also more upbeat on current economic conditions. In June, consumers were more optimistic on prevailing economic dynamics compared with conditions in the previous period, as reflected by a 4.7-point rise in the CECI to All components of the index posted gains, most significantly the Spending on Durable Goods Index, which climbed 5.9 points to (Graph 4). Regionally, respondents in 15 of the surveyed cities reported a higher CECI, particularly in Makassar (22.8 points) followed by Palembang (15.3 points). 2

Graph 4 Current Economic Condition Index by Components OPTIMISTIC PESSIMISTIC (Index) 130 120 110 100 90 80 121.2 136.1 130.8 95.5 94.6 97.4 113.9 128.9 123.

3 Graph 4 Current Economic Condition Index by Components OPTIMISTIC PESSIMISTIC (Index) Current Income Job Availability Buying Durable Goods Conditions Apr May Jun Respondents were more inclined to purchase durable goods in June, especially electronics and household furniture, with the corresponding index improving by 5.9 points to Furthermore, respondents with a monthly spend totalling Rp3-4 million reported the largest gains in the Spending on Durable Goods Index (Graph 5) as well as those from nearly all age brackets, particularly aged (Graph 6). Consumers were more inclined to buy durable goods due to rising incomes in June after receiving annual Eid-ul-Fitr allowances, while business revenues also enjoyed gains. Such dynamics were corroborated by an increase in the Current Income Expectations Index of 5.3 points to in June, affecting respondents spending more than Rp3 million each month (Graph 7) and those aged (Graph 8). Graph 5 Spending Durable Goods Index by Spending Level Graph 6 Spending Durable Goods Index by Respondent s Ages Graph 7 Income Index by Spending Level Graph 8 Income Index by Respondent s Ages 3

Graph 9 Job Availability Index by Respondents Educational Level Graph 10 Job Availability Index by Respondent s Ages Furthermore, respondents also perceived improvements in terms of job availability

Respondents with a high school education or diploma (Graph 9) were most upbeat on prospective job availability along with those aged 31-50 (Graph 10). A3.

4 Graph 9 Job Availability Index by Respondents Educational Level Graph 10 Job Availability Index by Respondent s Ages Furthermore, respondents also perceived improvements in terms of job availability in the reporting period, with the corresponding Job Availability Index strengthening 2.8 points to a position of 97.4 in June. Respondents with a high school education or diploma (Graph 9) were most upbeat on prospective job availability along with those aged (Graph 10). A3. Consumer Expectation Index Consumers were more optimistic regarding future economic dynamics. Consumers were more optimistic regarding future economic dynamics in June, as reflected by the CEI rising from in May to The CEI gains were driven by growing expectations of future incomes and job availability in the next 6 months (Graph 11). Regionally, respondents in 12 of the surveyed cities reported CEI increases, led by Makassar (15.5 points). Graph 11 Consumer Expectation Index by Components Respondents were optimistic that job availability would improve in the upcoming 6 months. Such developments were confirmed by an increase in the corresponding Job Availability Expectation Index from the month earlier to Respondents with a high school education or diploma were most upbeat on potential job availability along with those aged (Graph 12 and Graph 13). 4

Graph 12 Job Availability Expectation Index by Respondents Educational Level Graph 13 Job Availability Expectation Index by Respondent s Ages Consumers also expected incomes to rise in the next 6

Most optimistic were respondents spending Rp2-4 million per month and more than Rp5 million (Graph 14) as well as those aged 30-60 (Graph 15).

5 Graph 12 Job Availability Expectation Index by Respondents Educational Level Graph 13 Job Availability Expectation Index by Respondent s Ages Consumers also expected incomes to rise in the next 6 months, confirmed by an increase in the Income Expectation Index of 0.9 points to in June. Most optimistic were respondents spending Rp2-4 million per month and more than Rp5 million (Graph 14) as well as those aged (Graph 15). Graph 14 Income Expectation Index by Spending Level Graph 15 Income Expectation Index by Respondent s Ages Graph 16 Business Condition Expectation Index by Spending Level Graph 17 Business Condition Expectation Index by Respondent s Ages Meanwhile, the business outlook remained positive but the respondents were slightly less upbeat compared with conditions the month earlier due to a perceived build-up of inflationary pressures. The Business Condition Expectation Index stood at in June, moderating slightly from in the previous period. The most significant declines were predicted by respondents spending Rp1-2 million and Rp4-5 million per month as well as those aged and over 60 (Graph 16 and Graph 17). 5

6 B. Consumer Financial Conditions B1. Consumer Income Consumers were more inclined to service debt in June. The recent bump in income received by respondents in June, coupled with the seasonal spike in household demand during Eid-ul-Fitr, translated into more consumption, with the average propensity to consume ratio climbing from 66.1% to 67.1%. In contrast, the savingsto-income ratio fell from 19.6% to 19.4% in the reporting period. Based on spending bracket, respondents with a monthly spend of Rp2.1-5 million were more disposed to consume (Graph 19), while those spending Rp2.1-4 million per month tended to save less (Graph 20). Graph 18 Distribution of Household Income Allocation Graph 19 Household s Consumption Alocation by Spending Level Graph 20 Household s Propensity to Saving by Spending Level B2. Consumption, Savings and Debt Households expected to spend less on consumption in the next 3 months. Households expected to consume less in the next 3 months (September ) as consumption returns to normal after the upcoming Eid-ul-Adha celebrations, indicated by a decline in the corresponding Consumption Expectation Index from to (Graph 21). On the other hand, households predicted to save more and service their outstanding debt in the next 6 months (December ) (Graph 22). 6

Graph 21 Consumption Expectation Index for The Next 3 Months Graph 22 Saving and Debt Expectation Index for The Next 6 Months B3.

The percentage of respondents planning to buy/build a house witnessed a decrease. In June, most respondents (47.

0% the month earlier, followed by property and gold/jewellery (Graph 23).

6% of respondents through that buying or building a house (or renovating) was a possibility, down from 29.8% the month earlier (Graph 24).

7 Graph 21 Consumption Expectation Index for The Next 3 Months Graph 22 Saving and Debt Expectation Index for The Next 6 Months B3. Placements of Disposable Income and House Purchases Most respondents prioritised savings/term deposits when placing their disposable income in the next 12 months. The percentage of respondents planning to buy/build a house witnessed a decrease. In June, most respondents (47.4%) still prioritised banking instruments in the form of savings/term deposits when placing their disposable income in the next 12 months (July June 2019), increasing from 46.0% the month earlier, followed by property and gold/jewellery (Graph 23). The percentage of respondents expressing a keen interest in buying or building a house (or renovating) in the upcoming 12 months decreased from 7.5% to 7.0% in the reporting period. Furthermore, 28.6% of respondents through that buying or building a house (or renovating) was a possibility, down from 29.8% the month earlier (Graph 24). Graph 23 Placement of Disposable Income in The Next 12 Months Graph 24 Plan to Buy/Build Property in The Next 12 Months C. Consumer Price Expectations C1. Price Expectations for the Upcoming 3 Months Respondents predicted milder inflationary pressures in September. Respondents predicted milder inflationary pressures in the next 3 months (September ) as demand returns to normal in the wake of Eid-ul-Adha, indicated by a decline in the 3-month Price Expectations Index (PEI) from last month to (Graph 25). Regionally, respondents in 15 cities confirmed a PEI decline, most significantly in Surabaya (-26.8 points) and Semarang (-23.3 points). 7

Graph 25 Price Expectation Index for the next 3 months C2. Price Expectations for the Upcoming 6 Months Respondents predicted a build-up of inflationary pressures in December.

the 6-month PEI from 166.8 last period to 173.2 (Graph 26). Regionally, respondents in 11 of the surveyed cities predicted an accumulation of inflationary pressures, particularly in Medan (21.

8 Graph 25 Price Expectation Index for the next 3 months C2. Price Expectations for the Upcoming 6 Months Respondents predicted a build-up of inflationary pressures in December. In the next 6 months (December ), respondents predicted increasing seasonal demand for goods and services at Christmas and New Year to intensify inflationary pressures, as reflected by an increase in the 6-month PEI from last period to (Graph 26). Regionally, respondents in 11 of the surveyed cities predicted an accumulation of inflationary pressures, particularly in Medan (21.6 points) followed by Padang (16.5 points). Graph 26 Price Expectation Index for the next 6 months C3. Price Expectations for the Upcoming 12 Months Consumers predicted weaker inflationary pressures in June Consumers predicted weaker inflationary pressures in the next 12 months (June 2019), reflecting a drop in the 12-month PEI from to (Graph 27). Respondents in 15 of the surveyed cities expected inflationary pressures to ease, most significantly in Samarinda (-13.0 points) followed by Banten (-9.5 points). 8

9 Graph 27 Price Expectation Index for the next 12 months 9

10 Table 1 Consumer Confidence Index and Prices Expectation Index Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) A. Consumer Confidence Index (CCI) - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Current Economic Condition Index (compared to the previous 6 months) - Current Incomes Index Job Availability Index Buying Durable Goods Conditions Index Consumer Expectation Index (the next 6 months compared to the current condition) - Incomes Expectation Index Job Availability Expectation Index Business Activities Expectation Index B. Price Expectations Index - Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months

11 Table 2 Consumer Confidence Index by Respondent Expenditure Level Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) A. Consumer Confidence Index (CCI) - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million B. Current Economic Condition Index (CECI) - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million C. Consumer Expectation Index (CEI) - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million B1. Current Income Index - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million B2. Job Availability Index - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million B3. Buying Durable Goods Conditions Index - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million C1. Incomes Expectation Index - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million C2. Job Availability Expectation Index - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million C3. Business Activities Expectation Index - Expenditure level Rp. 1-2 million Expenditure level Rp. 2,1-3 million Expenditure level Rp. 3,1-4 million Expenditure level Rp. 4,1-5 million Expenditure level > Rp. 5 million

12 Table 3 Consumer Confidence Index by Respondent Age Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) A. Consumer Confidence Index (CCI) year year year year >60 year B. Current Economic Condition Index (CECI) year year year year >60 year C. Consumer Expectation Index (CEI) year year year year >60 year B1. Current Income Index year year year year >60 year B2. Job Availability Index year year year year >60 year B3. Buying Durable Goods Conditions Index year year year year >60 year C1. Incomes Expectation Index year year year year >60 year C2. Job Availability Expectation Index year year year year >60 year C3. Business Activities Expectation Index year year year year >60 year

13 Table 4 Consumer Confidence Index by Respondent Education Level Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) A. Consumer Confidence Index (CCI) - High School Diploma Undergraduate Graduate B. Current Economic Condition Index (CECI) - High School Diploma Undergraduate Graduate C. Consumer Expectation Index (CEI) - High School Diploma Undergraduate Graduate B1. Current Income Index - High School Diploma Undergraduate Graduate B2. Job Availability Index - High School Diploma Undergraduate Graduate B3. Buying Durable Goods Conditions Index - High School Diploma Undergraduate Graduate C1. Incomes Expectation Index - High School Diploma Undergraduate Graduate C2. Job Availability Expectation Index - High School Diploma Undergraduate Graduate C3. Business Activities Expectation Index - High School Diploma Undergraduate Graduate

14 Table 5 Household Income Allocation by Respondents Expenditure Level Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) A. Total - Consumption Loan Repayments Savings B. Rp. 1 million - Rp. 2 million - Consumption Loan Repayments Savings C. Rp. 2,1 million - Rp. 3 million - Consumption Loan Repayments Savings D. Rp. 3,1 million - Rp. 4 million - Consumption Loan Repayments Savings E. Rp. 4,1 million - Rp. 5 million - Consumption Loan Repayments Savings F. > Rp. 5 million - Consumption Loan Repayments Savings

15 Table 6 Consumption, Saving and Debt Expectation Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) A. Total - Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Consumption Expectation Index in the next 3 months B. Rp. 1 million - Rp. 2 million - Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Consumption Expectation Index in the next 3 months C. Rp. 2,1 million - Rp. 3 million - Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Consumption Expectation Index in the next 3 months D. Rp. 3,1 million - Rp. 4 million - Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Consumption Expectation Index in the next 3 months E. Rp. 4,1 million - Rp. 5 million - Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Consumption Expectation Index in the next 3 months F. > Rp. 5 million - Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Consumption Expectation Index in the next 3 months Table 7 Placements of Disposable Income and House Purchases Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) A. Excess Income Allocation Plan in the Next 12 Months - Saving/ Deposit Gold/ Jewelry Equity/ Mutual funds Property (land, house, apartment) Others A. House Purchase/Construction Plan in the Next 12 Months - Very Possible Possible No Desire

16 Table 8 Consumer Confidence and Price Expectation Index by Region Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) 1. DKI Jakarta - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Bandung - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Semarang - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Surabaya - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Medan - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Palembang - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Banjarmasin - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Bandar Lampung - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Makassar - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Samarinda - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Denpasar - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Padang Description - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Changes 16

17 Description Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Jun-May) 13. Pontianak - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Manado - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Mataram - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Pangkal Pinang - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Ambon - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Banten - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for the next 3 months Price expectations index for the next 6 months Price expectations index for the next 12 months Table 9 Respondent Figures Descriptions Jan Feb Mar Apr May Jun Jul Aug Sep Okt Nov Dec Jan Feb Mar Apr May Jun Gender - Male Female Household Expenses - Rp. 1 million - Rp. 2 million Rp. 2,1 million - Rp. 3 million Rp. 3,1 million - Rp. 4 million Rp. 4,1 million - Rp. 5 million Over than Rp. 5 million Ages years years years years years above Educational Level - High School Diploma University Graduate/Post Graduate

18 Figure 1 Consumer Confidence Index (CCI) By Region Figure 2 Price Expectation Index for The Next 3 Months By Region 18

METHODOLOGY The has been conducted monthly since October 1999.

19 METHODOLOGY The has been conducted monthly since October Moreover, since January 2007 survey has involved 4,600 households as (stratified random sampling) in 18 cities, namely Jakarta, Bandung Bodebek, Semarang, Surabaya, Medan, Makassar, Bandar Lampung, Palembang, Banjarmasin, Padang, Pontianak, Samarinda, Manado, Denpasar, Mataram, Pangkal Pinang, Ambon and Banten. The index per city is calculated using the balanced score method (net balance + 100) which indicates that a score of 100 is considered optimistic and index of below is 100 berarti pessimistics. 19

CONSUMER SURVEY. A1. Consumer Confidence Index

CONSUMER SURVEY. A1. Consumer Confidence Index CONSUMER SURVEY April 2018 The Bank Indonesia Consumer Survey revealed that consumers were more optimistic on economic condition in April 2018 compared to the previous period, with the Consumer Confidence