CONSUMER SURVEY. (Index, weighted average of 18 cities) OPTIMISTIC PESSIMISTIC. Effect of fuel price reduction

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PESSIMISTIC OPTIMISTIC CONSUMER SURVEY December 2016 Bank Indonesia Consumer Survey confirmed that consumer confidence in economy conditions persisted in December 2016.

1 PESSIMISTIC OPTIMISTIC CONSUMER SURVEY December 2016 Bank Indonesia Consumer Survey confirmed that consumer confidence in economy conditions persisted in December Accordingly, the Consumer Confidence Index (CCI) remained in optimistic territory (>100) at 115.4, despite reducing slightly from reported the month earlier. On a quarterly basis, the average CCI recorded at 116.0, increased from in Q3/2016, or higher than in Q4/2016. Respondents expected inflationary pressures to decrease in March 2017, with the 3-month Price Expectations Index (PEI) down 2.1 points on the month earlier to Decreasing the 3-month PEI is expected to affecting most on clothing as well as foodstuffs. Respondents predicted a smaller increase in the level of savings and position of debt for the next six months (June 2017) compared to last month. Consumer Confidence Index Consumer were more optimistic in Q4/2016 Bank Indonesia Consumer Survey confirmed that consumers remain upbeat on economic conditions in December 2016, despite a moderate dip recorded in the CCI from to Respondents blamed the slight drop (1.0 points) in the Consumer Expectation Index (CEI) to 128.0, contrasting the 0.1 points gain in the Current Economic Condition Index (CECI) to (Graph 1). Graph 1. Consumer Confidence Index (Index, weighted average of 18 cities) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Consumer Confidence Index (CCI) Average CCI (quarterly) Effect of fuel price reduction Effect of fuel subsidy reduction Effect of fuel, gas, and electricity price reduction Effect of fuel price reduction Respondents in 10 cities reported a lower CCI in December 2016, most notably in Makassar (-13.9 points) and Ambon (-10.5 points), while those spending Rp2-3 milion per month reported the largest CCI decline. 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

PESSIMISTIC OPTIMISTIC Consumer Survey On a quarterly basis, the average CCI stood at 116.0 in the fourth quarter of 2016, rise from 112.5 in Q3/2016, or higher than 103.5 Q4/2016.

2 PESSIMISTIC OPTIMISTIC Consumer Survey On a quarterly basis, the average CCI stood at in the fourth quarter of 2016, rise from in Q3/2016, or higher than Q4/2016. The increasing CCI is driven by all components (Graph 2). Graph 2. Quarterly Consumer Confidence Index by Components Current Economic Condition Index Consumers became upbeat on current economic conditions in December Respondents perceived more promising current economic conditions in December 2016 compared to the month earlier, indicated by a 0.1 points rise in the CECI to during the reporting period. The gains were reflected in the current income index and the job availability index, rising by 0.9 points and 0.8 points touched the level of and 88.6 respectively. In contrast, the conditions for buying durable goods index recorded decline 1.4 points in December 2016 (Graph 3). Graph 3. Current Economic Condition Index by Components (Index) Oct-16 Nov-16 Dec Current Incomes Job Availability Buying Durable Goods Conditions Real Sector Statistics Division 2

3 PESSIMISTIC OPTIMISTIC Consumer Survey Respondents in 9 cities were more optimistic on prevailing economic conditions, most significantly in Pontianak (17.2 points) and Banten (16.0 points). Described by households spending level, those spending Rp1-2 milion per month confirmed the largest CECI increases (Table 4). Consumer Expectation Index Looking forward, consumers were less optimistic on economic conditions in the next six months. Respondents were less optimistic on economic conditions in the next 6 months. Respondents cited a deceleration on future economic condition for the pessimism. Accordingly, the CEI was observed to decline 1.0 points on the month earlier to in December All components contributed to the CEI decline. The business conditions index for the next six months recorded fell 2.7 points to 132.3, while the income expectation index decreased 0.2 points to and the job availability index dropped 0.1 points to (Graph 4). Graph 4. Component of Consumer Expectation Index by Components (Index) Oct-16 Nov-16 Dec Incomes Expectation Job Availability Expectation Business Condition Expectation Regionally, respondents in 8 cities confirmed a decline in the CEI during December 2016, particularly in Banten (-29,5 points) and Makassar (-11,6 points). According to the consumer spending level, households with spending Rp2-3 milion per month noted the sharpest CEI decline (Table 4). Price Expectations Index Consumers predicted inflationary pressures to ease in March Respondents expected inflationary pressures to ease in March 2017, with the 3-month Price Expectation Index (PEI) falling from to (Graph 5). Respondents expected inflationary pressures to diminish significantly on clothings as well as foodstuffs. Conversely, respondents predicted inflationary pressure to accumulate in the next six month (June 2017) afected by demand spike during holly fasting month and welcoming Eid ul Fitr. Hightening pressure on pricess is reflected by Real Sector Statistics Division 3

Consumer Survey an increase in the 6-month PEI from 163.5 on the month earlier to 171.6 (Graph 6). Graph 5.

0 140 1112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 2013 2015 2016 2017 Cumulative inflation in 3 months (right axis) Price Expectation Index 3 months ahead

0 150 1112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 2013 2015 2016 2017 Cumulative inflation in 6 months (right axis) Price Expectation Index 6 months

4 Consumer Survey an increase in the 6-month PEI from on the month earlier to (Graph 6). Graph 5. Price Expectation Index for the next 3 months 200 (Index, weighted average of 18 cities) ( % ) Cumulative inflation in 3 months (right axis) Price Expectation Index 3 months ahead (left axis) -4.0 Graph 6. Price Expectation Index for the next 6 months (Index, weighted average of 18 cities) ( % ) Cumulative inflation in 6 months (right axis) Price Expectation Index 6 months ahead (left axis) 0.0 Consumer Financial Conditions Congruous with the observed decrease in CCI, the average propensity to consume ratio was observed to decrease 2.2% to 69.8% in December In contrast, the debt to-income ratio and savings-to-income ratio fell 1.5% and 0.7% respectively on the previous period to 13.0% and 17.2% (Graph 7). Real Sector Statistics Division 4

Consumer Survey Graph 6. Distribution of Household Income Allocation (%) (%) 30 80 72.0 25 70 71.0 69.8 20 15 17.3 16.5 17.2 11.6 11.5 13.

5 Consumer Survey Graph 6. Distribution of Household Income Allocation (%) (%) Loan Repayments Savings Consumption (rhs) 40 Consumers predicted a smaller increase in the level of savings for the next six months compared to last month. Respondents predicted a smaller increase in the level of saving in the six months compared to last month, indicated by a decrease in the 6-month savings expectation index of 0.3 points to On the other hand, the 6-month debt expectation also decrease 0.2 point to (graph 8). Graph 7. Saving and Debt Expectation Index for The Next 6 Months (Index) Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Real Sector Statistics Division 5

6 Table 1. Consumer Confidence and Price Expectations (Index) Descriptions Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Dec-Nov) A. Consumer Confidence Index (CCI) - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Current Economic Condition Index - Current Incomes Employment Conditions Buying Durable Goods Conditions Consumer Expectation Index - Current Incomes Expectation Employment Conditions Expectation Business Activities Expectation B. Price Expectations Index - Price expectations index for 3 months ahead by group: - Foodstuff Food, beverage, cigarettes, and tobacco Housing, electricity, gas, and fuel Clothing Health Transportation, communication, and financial servic Education, recreation, and sports Price expectations index for 6 months ahead Price expectations index for 12 months ahead Real Sector Statistics Division 6

7 Table 2. Respondent Figures (percentages) Descriptions Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 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 7

8 Table 3. CCI and CEI in 18 Cities Surveyed Descriptions Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Ags Sep Oct Nov Dec (Dec-Nov) 1. DKI Jakarta - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Bandung - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Semarang - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Surabaya - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Medan - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Palembang - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Real Sector Statistics Division 8

9 Descriptions Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Ags Sep Oct Nov Dec (Dec-Nov) 7. Banjarmasin - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Bandar Lampung - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Makassar - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Samarinda - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Denpasar - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Padang - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Pontianak - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Real Sector Statistics Division 9

10 Descriptions Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Ags Sep Oct Nov Dec (Dec-Nov) 14. Manado - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Mataram - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Pangkal Pinang - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Ambon - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Banten - Consumer Confidence Index (CCI) Current Economic Condition Index (CECI) Consumer Expectation Index (CEI) Price expectations index for 3 months ahead Price expectations index for 6 months ahead Price expectations index for 12 months ahead Real Sector Statistics Division 10

11 Table 4. CCI, CECI and CEI Described by Respondents Expenditure Descriptions Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Dec-Nov) A. Consumer Confidence Index (CCI) - 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 B. Current Economic Condition Index (CECI) - 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 C. Consumer Expectation Index (CEI) - 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 Real Sector Statistics Division 11

12 Table 5. Household Income Allocation Described by Respondents Expenditure Total IDR 1-2 million IDR 2-3 million IDR 3-4 million IDR 4-5 million > IDR 5 million DESCRIPTION 2015 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov (Nov-Oct) - Consumption Loan Repayments Savings Consumption Loan Repayments Savings Consumption Loan Repayments Savings Consumption Loan Repayments Savings Consumption Loan Repayments Savings Consumption Loan Repayments Savings Table 6. Saving and Debt Expectation Index for The Next 6 Months DESCRIPTIONS Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov (Nov-Oct) Saving Expectation Index for the next 6 months Debt Expectation Index for the next 6 months Real Sector Statistics Division 12

CONSUMER SURVEY. November 2016

CONSUMER SURVEY. November 2016 CONSUMER SURVEY November The Bank Indonesia Consumer Survey revealed that consumers remained optimistic in November, with the Consumer Confidence Index (CCI) reported at 115.9, albeit down slightly on