Warc Blog

Indonesians plan to spend less

28 June 2013
JAKARTA: Indonesian consumers plan to cut back their spending on clothes shopping and eating out as they feel the effects of a sharp reduction in fuel subsidies, a survey has found.

Kadence Indonesia, the market research agency, surveyed 500 respondents in Greater Jakarta, Surabaya, Medan, Balikpapan and Makassar to assess how they intended to adjust their spending after the removal of fuel subsidies that pushed diesel prices up 22% and petrol prices up 44%.

Some 35% indicated they would spend more on utilities such as water and electricity, while 32% anticipated spending more on fuel bills.

Half said they would reduce their spending on clothing and accessories, while 57% expected to eat out less, choices that are likely to adversely affect malls and places of entertainment. Smokers also said they would be cutting back.

The survey further showed that people would allocate the same amount of money for food, personal care products, medical care, milk, and other necessities such as mobile phone top-ups.

"This indicates that consumers view these categories as staple goods," Vivek Thomas, Kadence Indonesia managing director, told the Jakarta Post. "We predict that these categories will not be affected by the fuel hike."

An earlier survey from Bank Indonesia found that household consumption in May had slowed as consumers worried about a possible economic slowdown and a future lack of jobs.

The bank expected consumer confidence to continue to weaken over the coming six months, with employment prospects a major factor.

These findings stand in stark contrast to a Nielsen survey at the end of the first quarter of 2013 which said that Indonesian consumers were the most optimistic in the world, in part due to the strong domestic economic conditions.

Data sourced from Jakarta Post, Jakarta Globe; additional content by Warc staff

 
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