Data from Indonesia´s central bank, Bank Indonesia, indicate that Indonesia´s retail sales grew 14.8 percent in June 2013 compared to the same month last year. The growth was higher than expected. Previously, a survey among Indonesian retailers showed that a growth rate of 10.8 percent was expected in June. In May 2013, retail sales had climbed about 12 percent (YoY). As such, these numbers are evidence of growing domestic consumption led by the country´s rapidly expanding middle class.
The holy fasting month of Ramadan and subsequent Idul Fitri celebrations always add a couple of percentage points to consumption figures. Ramadan and Idul Fitri occurred in July and August and will therefore influence figures of consumption in both months. After the celebrations, retails sales will drop to a normal level. Also prior to the Ramadan, retail sales tend to increase, as can be seen in the June retail sales figure, because people buy products in preparation of the upcoming fasting month.
However, after the government decided to raise the price of subsidized fuels in June (which resulted in a 8.61 percent YoY inflation rate in July), Indonesians' purchasing power is expected to fall slightly as retailers are expected to increase prices of their products.