Good news at the start of the new year. Indonesia's consumer confidence has risen in December 2015 according to the latest Bank Indonesia survey. Consumer optimism means that consumers are more likely to purchase goods hence giving ammunition for accelerated economic growth (domestic consumption accounts for about 55 percent of the nation's total economic growth). The portion of income that respondents use for consumption rose 0.6 percent month-on-month (m/m) to 69 percent of their income.
Bank Indonesia's Consumer Confidence Index rose to 107.5 points in the last month of 2015, up 3.8 points from the preceding month. However, compared to one year earlier the index was down. In December 2014 the central bank's consumer index stood at 116.5 points.
The higher reading of December's Consumer Confidence Index was primarily supported by the improved Consumer Expectations Index and the Current Economic Conditions Index, rising 6.2 an 1.4 points, respectively. Indonesian consumers have become increasingly optimistic about the economic conditions of Indonesia for the next six months. Such optimism is supported by rapidly decelerating inflation (the country's inflation rate fell to 3.35 percent year-on-year in December 2015) and reports that the government will lower energy prices. Also, Indonesia's GDP growth is expected to accelerate in 2016 (after having been slowing since 2011).
However, respondents also said to expect higher prices of staple food products as well as higher prices of housing, electricity and fuel prices in March and June.
Bank Indonesia's Consumer Confidence Index is based on a survey that involves 4,600 households in 18 cities across the archipelago. A reading above 100 signals optimism.