Analysis on Indonesians’ Expenditure in 1996 and 2006

June 1, 2008

The data provided by Indonesian Statistics Bureau shows the difference between the Indonesia’s average per capita monthly expenditure in 1996 and in 2006. The data from both years can be compared directly by firstly adjusting the data of 1996 to it’s value in 2006 using inflation data based on the average consumer prices. It can be observed there that for essential goods, the expenditure were relatively constant. For instance, the expense differences for clothing and basic foods such as cereals, tubers, spices, oil, and some other foods nominally didn’t reach Rp 1,000 and have no significance percentage difference. It means that from time to time, the demand for this kind of needs would not change drastically regarding the price.

The low sensitivity against price makes the essential goods are considered as goods with very low price elasticity. Some of them can even be considered inelastic such as eggs, tubers, spices, and miscellaneous food items where the percentage difference of those items didn’t even exceeded 0.1%. Alcoholic beverages can also be considered inelastic since the spending for this commodity is very low so the difference won’t have any significance. This happened because the major consumers are the upper-class citizens, a small portion of the total population, whom expenditure wouldn’t be affected by the national product much.

There are significant escalation of spending for prepared food and beverages, and also for tobacco and betel. For prepared food and beverages, the escalation took place because of the evolution in consumers’ behavior where the prepared meals are preferred more than the conventionally cooked as the era advances. This symptom can also be diagnosed by observing the slight decrease in spending for foodstuffs that need more processing and therefore need more time before they can be consumed, such as meat or even cereals.

Indonesians undoubtedly are high tobacco and betel consumers. The consumption of these commodities was about 3 – 5.5% from the total expenditure. It is also quite obvious that the consumption of these commodities by rural citizens is higher than the urban citizens’ consumption. The allocation for tobacco and betel also rises almost 2% both in urban and rural areas.

The data also reveals the composition of expenditure difference between urban and rural citizens. Averagely, people in urban areas spend 50% of their total expenditure for foods and 50% for non-food commodities. While people in rural areas spend 60% of their total expense for food and the rest 40% for non-food commodities.

It can also be concluded from the data that Indonesians in 2006 are slightly prosperous than Indonesians in 1996. This conclusion can be extracted from the data of expenditure for housing and household facility. In 2006, Indonesians can allocate more on this section because the basic needs such as food and clothing had already been adequately fulfilled. This conclusion also obtained from the fact that the national income and expenditure per capita which increased almost 20 percent.

Hero of The Day: Mr. Caax Again
You made me looked alive bro!!

Moral of The Day: Think before speak!
The walls do have ears . . .

Lyric of The Day:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I ain’t happy, I’m feeling glad
I got sunshine, in a bag
I’m useless,but not for long
The future is coming on
~ Clint Eastwood – Gorillaz
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nice hectic weekend … love it!

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