CONSUMER SURVEY. October 2017

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CONSUMER SURVEY October The Bank Indonesia Consumer Survey confirmed that consumers remained optimistic, but slightly less upbeat, concerning economic dynamics in October, with the Consumer

1 CONSUMER SURVEY October The Bank Indonesia Consumer Survey confirmed that consumers remained optimistic, but slightly less upbeat, concerning economic dynamics in October, with the Consumer Confidence Index (CCI) recorded at 120.7, down from the month earlier. Both CCI components contributed to the downturn, namely the Current Economic Condition Index (CECI) and the Consumer Expectation Index (CEI). Congruent with less optimism concerning economic dynamics, respondents preferred to save rather than consume. Accordingly, the average propensity to consume ratio decreased from 66.4% to 65.7% and the debt service to income ratio from 14.4% to 14.1%. In contrast, the savings to income ratio increased from 19.2% to 20.2%. The survey also revealed that respondents predicted an accumulation of inflationary pressures in the next 3 months (January 2018). Respondents cited limited supply of foodstuffs, particularly rice, as the main harvesting season is not due until the end of the first quarter of A. Consumer Confidence Consumers remained optimistic in October. A1. Consumer Confidence Index Consumers remained optimistic concerning economic dynamics in October, with the CCI recorded at 120.7, down from the month earlier (Graph 1). Both CCI components contributed to the downturn, namely the CECI and the CEI, particularly in terms of the current job availability index and expectations of job availability in the upcoming 6 months. Graph 1. Consumer Confidence Index Respondents of nearly all spending and age groups reported a CCI decline in October, primarily those spending Rp2.1-3 million and Rp4.1-5 million per month as well as those aged (Graph 2 and Graph 3). Spatially, respondents from 11 of the cities surveyed confirmed CCI declines, most significantly in Ambon (-14.3 points) and Mataram (-12.5 points). Methodology The Consumer Survey has been conducted monthly since October Moreover, since January 2007 the Survey has involved 4,600 households as respondents (stratified random sampling) in 18 cities, namely Jakarta, Bandung, Semarang, Surabaya, Medan, Makassar, Bandar Lampung, Palembang, Banjarmasin, Padang, Pontianak, Samarinda, Manado, Denpasar, Mataram, Pangkal Pinang, Ambon and Banten. The index of each city is calculated using the balanced score method (net balance + 100), which indicates that a score of 100 is considered optimistic and an index of below 100 is pessimistic. Real Sector Statistics Division 1

Consumer Survey Grafik 2. CCI by Spending Level Grafik 3. A2.

Respondents perceived less optimistic current economic conditions in October compared to the previous period, reflected by a decline of 2.

Respondents attributed the decline to all components, especially the job availability index, which fell 5.8 points to 98.

2 Consumer Survey Grafik 2. CCI by Spending Level Grafik 3. A2. Current Economic Condition Index Respondents perceived less favourable current economic conditions. Respondents perceived less optimistic current economic conditions in October compared to the previous period, reflected by a decline of 2.7 points in the CECI to the level of Respondents attributed the decline to all components, especially the job availability index, which fell 5.8 points to 98.2 in October (Graph 4), affecting all education levels, particularly those with a master terms of age, respondents from all age groups confirmed a CECI decline, particularly those aged (Graph 6). Graph 4. Current Economic Condition Index by Components Graph 5. Job Availability Index by Respondents Educational Level Graph 6. Job Availability Index by Real Sector Statistics Division 2

Consumer Survey The consumer income index decreased in October, falling 0.1 points to 114.5.

Furthermore, consumers were also less inclined to purchase durable goods in October, particularly in the form of electronics, furniture and household furnishings.

1 million per month (Graph 9) reporting the deepest declines along with nearly all age groups (Graph 10). Graph 7. Income Index by Spending Level Graph 8. Income Ages Graph 9.

3 Consumer Survey The consumer income index decreased in October, falling 0.1 points to The declines mainly impacting respondents spending Rp1-3 million monthly (Graph 7) and those aged (Graph 8). Furthermore, consumers were also less inclined to purchase durable goods in October, particularly in the form of electronics, furniture and household furnishings. Such dynamics were explained by the index for buying durable goods, which fell 2.1 points to in the reporting period, with respondents spending more than Rp4.1 million per month (Graph 9) reporting the deepest declines along with nearly all age groups (Graph 10). Graph 7. Income Index by Spending Level Graph 8. Income Ages Graph 9. Buying durable goods Index by Spending Level Graph 10. Buying durable goods Index by A3. Consumer Expectation Index Looking forward, consumer expectations were less upbeat on the previous period. Looking forward, consumer expectations for the next 6 months were less upbeat compared to the previous period. The CEI decreased by 3.4 points in October to a level of 133.8, affecting all components, namely job availability (-6.1 points), business conditions (-2.6 points) and incomes (-1.6 points). The CEI declines in October were reported by respondents from all education levels and nearly all age groups, particularly those with a ma degree or doctorate as well as a high school education and respondents aged (Graph 12 and Graph 13). The respondents blamed the declines on Real Sector Statistics Division 3

Consumer Survey expectations of limited business expansion and private projects in the next 6 months. Graph 11.

earlier, with the declines primarily stemming from nearly all respondent groups based on spending and age (Graph 14 and Graph 15).

business expansion in the next 6 months.

4 Consumer Survey expectations of limited business expansion and private projects in the next 6 months. Graph 11. Consumer Expectation Index by Components Nevertheless, consumers remained upbeat on business conditions in the upcoming 6 months, albeit slightly less optimistic compared to conditions one month earlier, with the declines primarily stemming from nearly all respondent groups based on spending and age (Graph 14 and Graph 15). Consumer optimism was maintained by government plans to accelerate infrastructure development, but the respondents also cited escalating inflationary pressures as the most binding constraint to business expansion in the next 6 months. Consistent with weaker expectations of business conditions and job availability, consumers also predicted slower rising incomes in the upcoming 6 months, with respondents spending Rp2.1-3 million and aged over 60 most affected by the slowdown. Graph 12. Job Avaliability Expectation Index by Respondents Educational Level Graph 13. Job Availability Expectation Index Graph 14. Business Condition Expectation by Spending Level Graph 15. Business Condition Expectation Real Sector Statistics Division 4

Consumer Survey Graph 16. Income Expectation by Spending Level Graph 17. Income Expectation by B. Consumer Financial Conditions B1. Consumer Income Respondents were less inclined to consume.

5 Consumer Survey Graph 16. Income Expectation by Spending Level Graph 17. Income Expectation by B. Consumer Financial Conditions B1. Consumer Income Respondents were less inclined to consume. Congruent with less optimism concerning economic dynamics, respondents preferred to save rather than consume. The average propensity to consume ratio decreased from 66.4% in September to 65.7% and the debt service to income ratio from 14.4% to 14.1%. In contrast, the savings to income ratio climbed from 19.2% to 20.2% (Graph 18) in the same period. Graph 18. Distribution of Household Income Allocation Respondents spending Rp2.1-3 million and more than Rp5 million each month were least inclined to consume (Graph 19), while all respondent groups reported a greater propensity to save, particularly those spending Rp2.1-3 million monthly (Graph 20). Graph 19. Alocation by Spending Level Graph 20. Spending Level Real Sector Statistics Division 5

Consumer Survey B2. Consumption, Savings and Debt Households expected to spend less on consumption in the next 3 months. Households expected to save more in the next 6 months.

6 Consumer Survey B2. Consumption, Savings and Debt Households expected to spend less on consumption in the next 3 months. Households expected to save more in the next 6 months. Households expected to spend less on consumption in the next 3 months (January 2018), indicated by a decline of 0.6 points in the 3-month household consumption index to (Graph 21). Households from all spending groups anticipated consuming less, especially non-foods, with the biggest decline affecting respondents with a monthly spend of Rp4.1-5 million. Households expected to save more in the next 6 months (April 2018), while also spending more on loan repayments. Such developments were reflected by an increase of 2.6 points in the savings index to and an increase of 3.1 points in the debt expectation index to (Graph 22). 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 Respondents predicted greater interest in savings deposits and term deposits in the next 12 months. The latest survey confirmed that 49.3% of respondents would prefer to place their disposable income in savings deposits and term deposits in the next 12 months (as of October 2018), up from 47.0% in the previous survey. Meanwhile, the percentage of respondents inclined to invest in property as well as gold/jewellery fell 0.6% and 0.7% to 22.5% and 15.5% respectively. Real Sector Statistics Division 6

Consumer Survey Graph 23. Placement of Disposable Income in The Next 12 Months Fewer respondents were inclined to buy/build a house. In the upcoming 12 months, 65.

4% the month earlier, while the percentage of respondents who thought buying or building a house was a possibility decreased from 29.1% to 26.9% in October (Graph 24). Graph 24.

7 Consumer Survey Graph 23. Placement of Disposable Income in The Next 12 Months Fewer respondents were inclined to buy/build a house. In the upcoming 12 months, 65.9% of respondents expressed no desire to buy or build a house, up from 64.4% the month earlier, while the percentage of respondents who thought buying or building a house was a possibility decreased from 29.1% to 26.9% in October (Graph 24). Graph 24. Placement Plan on Property in The Next 12 Months C. Consumer Price Expectations C1. Price Expectations for the Upcoming 3 Months Respondents predicted inflationary pressures to accumulate in January Respondents predicted an accumulation of inflationary pressures in the next 3 months (January 2018), as reflected by the 3-months PEI increase from to in the reporting period (Graph 25). Respondents cited limited supply of foodstuffs, particularly rice, because the main harvesting season is not due until the end of the first quarter of 2018, along with household concerns that the Government will hike electricity rates and fuel prices at the beginning of 2018, for the build-up of inflationary pressures. Regionally, the 3-months PEI was reported to increase in 11 cities, particularly in Palembang (27 points) and Pontianak (18 points). Real Sector Statistics Division 7

Consumer Survey Graph 25. Price Expectation Index for the next 3 months Respondents also predicted inflationary pressures to escalate in April 2018. C2.

2 in the reporting period, reflecting an increase in inflationary pressures expected by respondents in April 2018.

8 Consumer Survey Graph 25. Price Expectation Index for the next 3 months Respondents also predicted inflationary pressures to escalate in April C2. Price Expectations for the Upcoming 6 Months The 6-months PEI climbed 3.1 points to in the reporting period, reflecting an increase in inflationary pressures expected by respondents in April Regionally, respondents in 10 cities confirmed an increase in the 6-month PEI, especially in Palembang (28.3 points) and Pontianak (22.5 points). Graph 26. Price Expectation Index for the next 6 months C3. Price Expectations for the Upcoming 12 Months Respondents predicted inflationary pressures to intensify in the next 12 months. Respondents also predicted inflationary pressures to intensify in the next 12 months (October 2018), reflecting a 12-months PEI of 175.5, up 1.9 points on the previous period. Regionally, respondents in 10 cities confirmed an increase in the 12-month PEI, especially in Pontianak (19 points) and Palembang (12.7 points). Real Sector Statistics Division 8

9 Consumer Survey Graph 27. Price Expectation Index for the next 12 months Real Sector Statistics Division 9

10 Table 1. Consumer Confidence Index and Prices Expectation Index Descriptions Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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 Employment Conditions Index Buying Durable Goods Conditions Index Consumer Expectation Index (the next 6 months compared to the current condition) - Incomes Expectation Index Employment Conditions 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 Real Sector Statistics Division 10

11 Table 2. Consumer Confidence Index by Respondent Expenditure Level Changes Descriptions Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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. Employment 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 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. Employment Conditions 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 Real Sector Statistics Division 11

12 Table 3. Consumer Confidence Index by Respondent Age Changes Descriptions Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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. Employment Conditions 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. Employment Conditions Expectation Index year year year year >60 year C3. Business Activities Expectation Index year year year year >60 year Real Sector Statistics Division 12

13 Table 4. Consumer Confidence Index by Respondent Education Level Changes Descriptions Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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. Employment Conditions 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. Employment Conditions Expectation Index - High School Diploma Undergraduate Graduate C3. Business Activities Expectation Index - High School Diploma Undergraduate Graduate Real Sector Statistics Division 13

14 Table 5. Household Income Allocation by Respondents Expenditure Level Changes Descriptions Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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 Real Sector Statistics Division 14

15 Descriptions Table 6. Consumption, Saving and Debt Expectation Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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 Changes Descriptions Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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 Real Sector Statistics Division 15

16 Table 8. Consumer Confidence and Price Expectation Index by Region Description Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 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 Real Sector Statistics Division 16

17 Changes Jan Feb Mar Apr May Jun Jul Aug Sep Oct (Oct - Sep) 10. 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 - 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 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 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 Real Sector Statistics Division 17

18 Table 9. Respondent Figures Descriptions Jan Feb Mar Apr May Jun Jul Aug Sep Okt 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 Real Sector Statistics Division 18

CONSUMER SURVEY. January 2018

CONSUMER SURVEY. January 2018 CONSUMER SURVEY January 2018 The Bank Indonesia Consumer Survey showed that consumers remained upbeat on current economic dynamics in January 2018, with no significant change reported in the Consumer Confidence