Indonesian consumer outlook mixed in October - surveys

Jakarta (Antara News) - Indonesian consumers were mixed in their outlook on the economy in two surveys in October, with some being bullish about the improving economic and employment outlook while others were downbeat about rising inflationary
pressures.

A central bank survey on Friday showed consumers turned optimistic in October, the first time in nearly a year.

Another survey by state-owned Danareksa Research Institute showed consumers remained pessimistic in the same period, with its consumer confidence index even falling to a four-month low on doubts over the state's ability to contain consumer prices.

The central bank, Bank Indonesia (BI), said that consumers turned optimistic as they expected Southeast Asia's biggest economy to improve in the following six months and that there would be more jobs available. BI did not further elaborate.

"I think inflation has stabilised and businesses have started expanding. It will create more jobs," Singapore-based economist of financial analysis firm IDEAglobal Gundy Cahyadi told Reuters.

"But if global oil prices keep increasing, if the government raised (domestic subsidised) fuel prices, it will hurt sentiment."

The central bank survey based on a survey of 4,650 households from 18 cities showed the index rose 3.5 points to 100.2 in October from 96.7 in September. The index rose above 100 points the last time in November 2006 when it reached 101.6 points.

A reading above 100 means consumers are optimistic about the future. The survey is aimed at measuring the mood of consumers towards buying goods.

Danareksa's survey based on at least 1,700 households across six different provinces, however, showed consumer confidence weakened by 0.9 percent to 82.2 in October due to shortages of government-administered kerosene fuel in parts of the country.

"Consumers still had doubts in the government's ability to stabilise the price of goods," the survey said, adding that low-income households have been the most affected by the kerosene shortages as they rely on the fuel for cooking.

The government in recent months launched a scheme aimed at encouraging low-income households to shift to gas from kerosene for cooking, but it was beset by problems including the distribution of gas stoves while supplies of kerosene were already cut in some places.

Indonesia's annual inflation rate dipped slightly in October to 6.88 percent from 6.95 percent in September as food price pressures eased after the Muslim fasting month of Ramadan.

The government expects benign domestic interest rates, following an easing in inflation from a six-year high of 18 percent in late 2005, to boost growth to 6.3 percent this year, which would be its fastest pace in 11 years.

Indonesia's economy needs to expand at least 6 percent annually to make a dent on unemployment which currently stands at around 10 percent of the 100 million strong labour force. (*)
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