Retail sales in Indonesia are anticipated to increase by 4.3% year-on-year in July, as highlighted by the Retail Sales Survey released by Bank of Indonesia on Friday. This forecast indicates a positive trajectory in the retail sector, driven primarily by expected increases in demand for food, beverages, tobacco, and apparel during this period. "Retailers expect food, beverages, and tobacco as well as clothing to drive sales in the reporting period," stated the central bank in its report.
However, the survey also revealed that respondents are bracing for a decline in sales in July when compared to June. This expected downturn is attributed to the conclusion of specific public holidays that could have artificially elevated sales figures. On a month-to-month basis, there's an anticipated contraction in retail sales of 7.4% from June to July.
This decline is attributed to the normalization of demand following the recently concluded Eid-ul-Adha national holiday, which typically results in a spike in consumption. Furthermore, the expectation is that sales of food, beverages, and tobacco; spare parts and accessories; and information and communication technology devices will see a slowdown when compared to June's performance. In June, Indonesia's Retail Sales Index recorded an annual increase of 2.7%—a positive sign that came mainly from strong consumer demand in the food and beverage sectors as well as the accessories market.
This uplift was complemented by a modest monthly growth of 0.4% in retail sales from May to June. On the topic of inflation, survey respondents have indicated that they foresee a cooling of inflation rates, as reported by Bank Indonesia. In terms of pricing expectations, there is an anticipation of milder inflationary pressures over the next three months.
However, a potential uptick in inflation is forecasted within the following six months. "Respondents expect retail prices to rise during the higher demand periods associated with the Christmas and New Year festive season," remarked Bank Indonesia, suggesting that seasonal fluctuations could play a significant role in pricing strategies. In July, Indonesia reported an official inflation rate of 2.13% year-on-year, marking the lowest inflation rate since December 2021, according to data from Statistics Indonesia.
This declining inflationary trend may provide a conducive environment for retailers to strategize effectively in the coming months, allowing them to optimize their stock and pricing arrangements ahead of peak shopping seasons..