April 13, 2023
JAKARTA – Retailers reported a jump in sales last month as consumers apparently entered a spending mood before and during Ramadan.
A Bank Indonesia (BI) report based on preliminary data and released on Wednesday showed that its retail sales index jumped 7 percent in March, more than making up for the 3.4 percent month-to-month (mtm) drop in February.
The improvement was “attributable to all commodity groups, led by information and communication equipment, cultural and recreation goods, as well as food, beverages and tobacco [FBT],” BI spokesman Erwin Haryono stated in a press release published on the central bank’s website.
He added that aside from the seasonal effect of the Islamic fasting month, “discount programs and smooth distribution” had contributed to the strong performance.
Even though Muslim consumers refrain from eating and drinking during daylight hours during Ramadan, they tend to spend more on food and beverages, as sumptuous meals are common for iftar when they break the day’s fast at sundown, often in a ceremonial setting or a private gathering.
The BI monthly retail survey also showed that its March index for real sales was up 4.8 percent year-on-year (yoy) at 215.2. This marked acceleration from the 0.6 percent annual rise seen in February as consumers forked out more, particularly on FBT, cultural and recreation goods, as well as clothing.
Retailers continue to struggle with selling smartphones and other devices, with the data showing that March 2023 sales in information and communication equipment had decreased 9 percent compared to March 2021.
But that still marked an improvement over the massive 18.9 percent yoy decline logged in February for the same products group, thanks to an increase of 7.2 percent over the month leading into Ramadan, which comes after an 18.6 percent mtm slump in February.
Smartphone sales have been poor for months in both Indonesia and the region, with data published earlier this year showing that shipments were down 4 percent yoy in Southeast Asia in the third quarter of 2022, the lowest level since early 2020. Yet the region still fared better than the rest of the world last year, when smartphone sales plummeted 12 percent.
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Results from another nationwide BI survey published on Tuesday showed that the consumer confidence index (CCI) strengthened by 0.9 points to 123.3 points in March, extending an upward trend that began last November.
BI said consumers expected the economy to be much better now and in the next six months, driven by improved perception on jobs prospects and business activities. However, expectations for wages were slightly bleaker last month compared to February.
The improved CCI was also reflected in an increase in sales of durable goods, such as home appliances and electronics, with the largest improvement in confidence seen among consumers with a monthly income of above Rp 5 million.
Read also: Retail sales to rebound, as consumer confidence rises: BI surveys