For many Indonesians, the recent spike in goods and services has forced belt tightening, The Wall Street Journal Southeast Asia Real Time blog reported.
Zainal, who sells fried rice on the side of a leafy Jakarta’s street, said he’s struggling to reduce his spending. He has been selling less fried rice as people are cutting back on eating out.
“I’m making less money now than before,” Mr. Zainal who uses one name said, adding he occasionally now makes around $19 a day, compared with between $20 and $25 a day in recent months.
He’s not alone.
“I’m trying to reduce my daily spending as prices increased so I can save some money to send my eldest daughter to high school next year,” said Ujang Cahyana, who makes around $4 a day selling traditional iced dessert.
More than 100 million Indonesians live on less than $2 a day, making them highly vulnerable to price increases.
Indonesian consumers will likely spend less after the government raised subsidized fuel prices late June, according to a Bank of Indonesia report, a further indication that the main growth engine of Southeast Asia’s largest economy may continue to sputter and be less attractive to foreign investors.
In its monthly consumer survey, Bank of Indonesia says the consumer confidence index fell to 108.4 in July from 117.1 in the previous month, “indicating slowing growth of household demands.”
A reading above 100 means consumers are optimistic.
July’s consumer confidence level indicated “better economic levels compared with 2008,” the last time the government raised domestic fuel prices. Consumer confidence level dipped to 73.1 in June of 2008 after fuel price increased in the previous month.
The central bank conducts the monthly consumer survey in 18 major cities across Indonesia, with around 4,600 respondents.
The survey also showed that consumers view price pressures to ease in the next three months on declining demands after Muslim holy month of Ramadan, which ended on Aug. 8. Read more. (Subscription required.)
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