Indonesian retailers prepare for inflation shock

Indonesian retailers have warned consumers of prices rises ranging from five to 12 per cent.

Roy N. Mandey, chairman of the Indonesia Retailers Association (Aprindo), says the nation’s retailers plan to increase prices to consumers by an average of six to seven per cent as they battle with the weakening value of the rupiah.

“Price increases for food and beverage products would be around five per cent, while electronics would see a hike of between 10 and 12 percent,” Mandey said in an interview with the Jakarta Globe.

The Indonesian currency has lost 15 per cent of its value this calendar year, and the government has disrupted the economy further by introducing new import tariffs on many consumer goods and restricting alcohol sales in convenience stores.

Mandey said in an interview he expected retailers to increase prices in October, a typically high month for stock replenishment.

Members of Aprindo, which include hypermarket operator Matahari Putra Prima and convenience store network Sumber Alfaria Trijaya, have been struggling to respond to stagnating retail demand as the purchasing power of consumers has slipped.

In July, Indonesian retail sales growth fell to its lowest level since last December, rising just 4.8 per cent.

In 2014, Indonesian retail sales topped Rp 168 trillion, but the last estimate for 2015 stood at just 152 trillion. Aprindo is hoping for Rp 175 trillion but says for that level to be reached the government would have to remove some regulatory barriers.