Retail sales in Indonesia appear to have contracted again on a monthly basis (month on month/mom) and have slowed down on a yearly basis (year on year/yoy). Data from Bank Indonesia (BI) shows that retail sales seem less satisfactory.
As of September 2024, the Real Sales Index (RSI) recorded 210.6, growing by 4.8% year-on-year (yoy), lower than the 5.8% yoy growth in August 2024. Meanwhile, the forecast for October 2024 shows a decline to 1% yoy.
Growth/Contraction of Indonesia’s Real Sales Index (%)
Source; https://www.datawrapper.de/_/b7ABo
Meanwhile, on a monthly basis, it is in the contraction zone at 2.5% mom in September, down from a previous growth of 1.7% mom (August 2024). Furthermore, in the October 2024 forecast, IPR appears to return to the contraction zone at 0.5% mom.
Growth/Contraction of Indonesia’s Real Sales Index by Group (% mom)
If examined in more detail, the pressure on the IPR both monthly and annually comes from the Information and Communication Equipment group.
On a monthly and yearly basis, the Information and Communication Equipment group contracted by -12.9% and -29.4%, respectively.
Growth/Contraction of Indonesia’s Real Sales Index by Group (% yoy)
The IPR forecast for October 2024 is worsening compare to September 2024, particularly with the Information and Communication Equipment group, which has consistently been in the annual contraction zone.
This group seems to have never grown on an annual basis throughout 2024. Meanwhile, on a monthly basis, the growth of this group only occurred three times, namely in March, April, and August 2024.
Even in October 2024, the IPR of this group is expect to experience a much deeper slowdown compared to the previous period, both monthly and yearly.
For your information, the group of Information and Communication Technology (ICT) tools consists of devices used to process, store, and transfer information. ICT tools can divide into two types, namely information technology equipment and communication technology equipment.
Information technology equipment is used to process data into information, such as personal computers and laptops.
Meanwhile, communication technology equipment is used to send and receive information, such as telephones, radios, televisions, faxes, satellites, cell phones, and modems.
When the IPR of this group continues to slow down, it means that electronic goods tend to be less in demand by the public for the past one to two months. The public seems to be focusing more on fulfilling primary needs, such as food and beverages. Moreover, electronic goods are items that do not easily break or need to be replaced in a short period.
As long as the electronic goods owned by the public are still in good condition, it seems that the public will tend to hold off on purchasing new electronic goods unless there are significant promotions or excess money available.
Retail Sales & Household Consumption Forecast
The Real Sales Index throughout the third quarter of 2024 appears relatively good compared to the second quarter of 2024. The RSI for the third quarter of 2024 is indicated to grow by 5% year-on-year, higher than the second quarter of 2024 which grew slightly by 0.7% year-on-year.
The improvement in retail sales performance occurred in the clothing sub-group (2.2% yoy), as well as in the food, beverage, and tobacco group (7.1% yoy).
However, when examined in more detail, there is a clear contraction in the information and communication equipment group (-11.6% yoy), other household equipment (-6.6% yoy), and cultural and creative goods (-3.2% yoy).
Overall, this caused Indonesia’s economic growth, which is around 53% driven by household consumption (HC), to appear to slow down from the second quarter of 2024, which grew by 5.05% year-on-year, to 4.95% year-on-year in the third quarter of 2024.
Chief Economist of Bank Mandiri, Andry Asmoro, said that Indonesia’s consumption growth in the first, second, and third quarters of 2024 tends to be flat.
“In the first, second, and third quarters, consumption growth tends to be flat. Consumption grows below 5%,” said Andry (12/11/2024).
He also emphasized that for Indonesia to grow higher, investment needs to grow higher above 5%.
“Business certainty needs to be improved so that investment can increasingly flow into Indonesia,” Andry explained.
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