The latest survey of Indonesia's central bank (Bank Indonesia) indicates that domestic private consumption and household consumption in Indonesia remain strong, evidenced by a 28.4 percentage growth (year-on-year) of retail sales in January 2014. This growth was particularly supported by strong sales of information and communication equipment. These sales rose 75 percent (yoy). Traditionally, Indonesia's private consumption accounts for about 55 percent of the country's total annual economic expansion.
Bank Indonesia noted that growth of retail sales were supported by financing facilities that helped consumers to purchase the goods. Strong demand from Indonesia's rapidly expanding middle class is one of the major reasons for foreign companies to try to tap this market, resulting in increasing foreign direct investments in recent years.
Further growth of retail sales in Indonesia is expected to slow in February and March but will pick up again in April when the legislative election is held on 9 April 2014. This event is estimated to boost consumption as well as to increase the money flow in society.
The survey also indicated that price pressures will reduce in three to six months from now. This expectation is based on Indonesia's easing inflation pace. After increasing prices of subsidized fuels in June 2013, inflation accelerated to nearly nine percent (yoy). However, since September 2013, inflation has been under control. According to the latest data of Statistics Indonesia, inflation moderated to 7.75 percent in February 2014 (yoy) from 8.22 percent (yoy) in the previous month. This trend is expected to continue in the months ahead.
In 2014, Indonesia's gross domestic product (GDP) is expected to grow between 5.6 and 6.0 percent, roughly similar to last year's result of 5.78 percent.
Inflation in Indonesia:
|Month|| Monthly Growth
| Monthly Growth
(annual percent change)
Source: Statistics Indonesia