Indonesian Confidence Has First Gain in Eight Months

By Arijit Ghosh

Aug. 12 (Bloomberg) -- Indonesia's consumer confidence rose for the first time in eight months in July as households anticipated that inflation will slow and incomes will increase.

The measure rose to 82.1 last month from 79.1 in June, according to a Bank Indonesia survey released today. A reading below 100 indicates pessimists outnumber optimists.

A decline in oil prices, which fell to a 14-week low yesterday, may help Bank Indonesia meet its target of slowing inflation to between 6.5 percent and 7.5 percent next year. Economic growth in Southeast Asia's biggest economy probably exceeded 6 percent for a seventh quarter in the three months to June as rising coal, palm oil and rubber exports lifted spending.

``Going forward, it will depend on the ability of the government and central bank to control prices,'' said Purbaya Yudhi Sadewa, chief economist at Danareksa Research Institute in Jakarta. Should the index extend gains it will ``show there's enough purchasing power.''

A separate survey done by Danareksa showed consumer confidence rose to 72.7 in July from 65.3 a month earlier.

Consumer prices rose a more-than-expected 11.9 percent in July. That may have been the peak after the government increased fuel prices by about 30 percent in May, central bank Governor Boediono said on Aug. 8.

A measure that tracks expectations of family incomes in the next six months rose to 115.4 in July from 114.4 a month earlier, according to the Bank Indonesia survey of 4,600 households in 18 of the nation's major cities.

Gross domestic product expanded 6.2 percent in the three months ended June 30 from a year earlier, after gaining 6.3 percent in the preceding quarter, according to the median forecast of 20 economists surveyed by Bloomberg News. The Central Statistics Bureau will release the data on Aug. 14.

To contact the reporter on this story: Arijit Ghosh in Jakarta at aghosh@bloomberg.net