Consumer Confidence Drops to Lowest level
Tuesday, 16 January, 2007 | 14:22 WIB

TEMPO Interactive, Jakarta: Consumer confidence in late 2006 was weak due to the price rise of basic needs, especially rice.

A survey of the Indonesian consumer confidence that Danareksa Research Institute conducted in December of last year showed that the index of consumer confidence drastically plunged by 8.3 percent to 84.1 from 91.6 in November 2006. Two components of the consumer confidence index—recent situation and expectation indices—have also decreased to 62.0 and 100.6. “These are the lowest levels as of February 2006,” said Director of Danareksa Research Purbaya Yudhie Sadewa at a press conference yesterday (01/15) in Jakarta.

He explained that the rise of food prices has become the consumer's main concern, especially those living in rural areas, by the end of last year. Of 1,700 households in six areas of the survey, 27.4 percent of inhabitants said that the price rise was the main cause of the drop in the economy in their villages.

According to him, this fact should signal the government that people were hit hard with the rise of the food price. “The government should have anticipated it, taking into account that the rise was caused by seasonal factors and the delay of the planting season,” he said.

The drop in the consumer confidence level actually occurred once in October 2005 when the government increased the fuel price more than double. “So, the drop in confidence was actually a reaction of the government's inability in controlling the price,' he said. He was optimistic that consumer confidence will be back to normal if the government is capable of handling the price.

AGOENG WIJAYA