The peoples buying power is reflected by consumption, Faisal said an informal discussion at the office of the Communications and Informatics Minister here last weekend.
"The peoples buying power will shrink if the prices grew higher than the peoples income as reflected in inflation rate," he said.
He said there was an interesting phenomenon when certain group of the community recorded an increase in income but their consumption remained unchanged as they increased their savings.
"That tendency was obvious from the rise in the amount of third party funds in banks since October, 2016," he said.
Therefore, less spending does not necessarily mean that the buying power of the people is shrinking, he added.
Meanwhile, head of the Central Bureau of Statistics (BPS) Suhariyanto denied reports that the buying power of the people has declined.
"It is obvious from the fact that household consumption grew 4.95 percent in the second quarter of this year," Suhariyanto said addressing the same forum.
Coordinating Minister for Economy Darmin Nasution also said he disagreed with suggestion that the purchasing power of the people is weakening.
The purchasing power of the people should be gauged accurately with credible indicator, not only based on retail data.
A survey by Bank Indonesia showed that retail sales in the country rose 6.3 percent year on year (yoy) in June 2017 higher than a growth of 4.3 percent in the previous month.
The higher growth in retail sales in June was attributable to an increase in household consumption during the Islamic holy month of Ramadhan and Ied ul Fitri, the survey said.
Year-on-year, however, retail sales in June , 2017 slowed from a 16.3 percent growth recorded in the same month last year.
The increase in June, 2017 was recorded in the sales of food commodities growing 10.5 percent (yoy) and non food products rising 0.2 percent (yoy).
By months, the real sales growth was 8.5 percent month to month in June , 2017 , higher than 3.8 percent in May in the same year, said the survey involving 700 retailers held every month in 10 large cities in the country.
The Central Bank estimated that retail sales dropped in July as indicated by a 3 percent decline in real sales index (IPR) that month on return to normal level of household consumption after Ied ul Fitri.
The sharpest fall in consumption was expected for non food products in July, the survey said.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2017
