Retail sales in Indonesia are projected to see a modest increase of 1% year-on-year in October, as indicated by the Retail Sales Survey recently released by Bank Indonesia. Retailers are optimistic about stronger sales in categories such as cultural and recreational goods, automobile parts and accessories, and clothing, highlighting a positive outlook from the central bank. In September, Indonesia's retail sales index, which serves as a key metric for sector performance, experienced a year-on-year increase of 4.8%, a slight decrease from the 5.8% growth observed in August.
The retail sector received a boost from the timing of the Indonesia Independence Day celebration in August, resulting in a monthly decline of 2.5% in retail sales from August to September. Respondents to the retail survey expressed concerns about potential inflation in the upcoming three to six months, anticipating that inflationary pressures may build up.
Retailers expect inflation to escalate during the approaching Christmas and New Year holiday periods, as well as during the holy month of Ramadan in March 2025, underscoring the challenges ahead as per the insights gathered from the monthly survey. In mid-September, Bank Indonesia made a significant move by lowering key lending rates by 0.25%.
The central bank has forecasted that the nation’s gross domestic product (GDP) will expand by 5.2% in 2024 and maintain a similar growth rate in 2025. Furthermore, the current inflation rate is within the central bank’s target corridor of 2.5% plus or minus 1%, and it is anticipated to stay under control through 2025, as stated by the central bank..