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Bank Indonesia Report Anticipates Local Retail Sales Back on the Rebound

Retail sales should have returned to double digit growth pace in January after a drop in the price of low-grade gasoline following the removal of subsidies at the start of the year.

According to a Monday survey from the country’s central bank, Bank Indonesia, retail sales were expected to have risen 13 percent last month, compared to a 4.6 percent increase in December.

Retail sales data are usually only released two months after the month being reported on.

November  saw retail sales grow 11 percent, a figure revised from 14 percent in BI’s previous report.

The central bank’s survey of 650 retailers in 10 major cities showed that retailers expected an increase in sales of telecommunication equipment last month. Still, retailers anticipate sales slowing in the next three months, noting that demand in general may likely slow in Southeast Asia’s biggest.

Additionally, retailers expect price pressures will ease by March with fewer concerns “regarding the impact of the subsidized fuel increase in November,” Bank Indonesia wrote.

The government increased the prices of subsidized gasoline and diesel by an average of 33 percent in November, before removing the subsidy for gasoline entirely and scaling back the aid for diesel to close to the pre-hike level.

The BI report also noted that price pressure and retail sales were expected to rise in June as demand picks up during the Islamic holy month of Ramadan.

The retail survey report follows a global consumer confidence report from Nielsen, a global research company, that showed that in the last quarter of 2014 Indonesian consumers were the second most confident globally after India.

Still, Nielsen reported that 52 percent of consumers said that they would spend less on new clothing this year, while 47 percent would delay any upgrades in consumer technology.

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