Indonesia’s Retail Sales dropped by 0.3% on the year in January vs. a 0.5% drop seen in December, the latest survey conducted by Bank Indonesia (BI), the Indonesian central bank, released on Tuesday. The Bank Indonesia survey predicted sales in February to have remained weak, estimating a year-on-year drop of 1.9%. The total sales fell due to falling sales of clothes, auto parts and accessories.
Survey of Bank Indonesia estimates that retail sales on February will decline compared to the previous month. Sluggish retail sales came from the clothing group. The decline in retail sales was reflected in the February Real Sales Index or IPR of 214. This figure was down 1.9% on an annual basis or down 0.3% deeper than the decline in January 2020.
Overall, the clothing group recorded the sharpest decline of 29, 3%. In addition, the decline in retail sales also happened in the information and communication equipment sub-group by 6%, greater than the decline in the previous month by 3.1%. On the other hand, there was a slowdown in sales for the parts and accessories group, as well as the food, beverages and tobacco sub-group. Each recorded a growth of only 3% and 0.8% in February. Whereas in the previous month, the three grew 6.2% and 3.5% in January.
The downward trend in sales in February is also likely to continue regionally. The estimated contraction in sales growth occurred in the city of Medan, Surabaya, Denpasar and Bandung.
Respondents expect retail sales to increase in April and July 2020. This is reflected in the 3-month IEP Sales Expectation Index in the next 3 months, which is higher than 131.5 in the previous month. The increase is predicted to be driven by increased demand during Ramadan.
While retail sales in July 2020 are also expected to increase, as reflected in the 6-month IEP of 142.5, higher than 140.6 in the previous period. The increase is estimated to be in line with the Eid al-Adha moment which fell in the last week of July 2020.
The survey also indicated that inflationary pressure in April 2020 was predicted to increase compared to the previous month. This is indicated by the April General Price Expectation Index (IEH) of 165.5, an increase from 160.2 in the previous month. The increase is in line with preparations for the Ramadan which falls on the fourth week of April. On the other hand, IEH for the next 6 months at the level of retail traders is indicated to decline with an index of 161.8, lower than 166.0 in the previous month.