For 4 consecutive months, import of consumption goods has been declining, reaching -12% YoY in Sep-22 that was a further slowdown from -6% in the previous month. We believe this is a sign that demand is slowly deteriorating and has likely reached its peak in 3Q22. Typically without any substantial increase in purchasing power or general decrease in price, the slowdown could persist for 1-2 years, as we saw back in 2018-19 after commodity upcycle in 2016-2017. Additionally, back in 4Q14 when the government also increased fuel prices by cutting back their subsidy, purchasing power declined throughout 2015 as shown from lower consumer import as well.

With this in mind, government recent decision to increase fuel prices by 20-30% would also negatively impact purchasing power which could last for several quarters as we believe it would erode purchasing power especially for the low-middle income groups. Already, recent publication by BI on consumer confidence index (CCI) lost its momentum in Sep-22, the month fuel prices started to increase, down to 117 from 124 in Aug-22 (albeit still positive >100). The publication also showed more spending and less saving in Sep-22, which indicated a higher general price was felt by the consumers (lower CCI, but higher spending).