household expenditures analysis_rms

8/2/2019 Household Expenditures Analysis_rms

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telecommunications, household goods and services is growing. This reflects the fact thathousehold incomes in Indonesia have improved and people are able to spend more on non-fooditems. The spending patterns, however, vary across different household groups as can be seen inthe below graph.

Source: Euromonitor International from national statistics, 2006, processed

There has been a shift in consumer spending patterns in Indonesia, the proportion of consumerexpenditure on food and non-alcoholic beverages has declined significantly. It decreased from 55% of consumer expenditure in 2001 to 47.0% in 2006. The decline reflects the fact thatdisposable income has improved in Indonesia and people are able to spend more on non-fooditems

Consumer expenditure on non-food items has increased. During 2001-2006, for example,expenditure on communications has grown. Expenditure on education is also growing rapidly, asmore people understand the importance of a good education when competition for jobs is fierce.Expenditure on housing is going up, reflecting rising property prices and easier access tomortgage loans. Similar growth can also be seen in expenditure on other non-food categories

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10%

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30%

40%

50%

60%

70%

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100%

Indonesia - 2001 Indonesia - 2006

Comparative Percentage of Household ExpenditureIndonesia 2001 & 2006

Others

Education

Communication

Transports

Health

Housing

Clothing & Footwear

Alcoholic Beverage & Tobacco

Foo and Non Alcohoclic Beverage


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Comparative percentage of consumer expenditure by countries 2006

As can be seen in the table below, there is a positive correlation between the proportion ofhousehold expenditure devoted to various goods and services to the level of the countrys

welfare, especially the proportion of household expenditure devoted to food. The higher the levelof the countrys welfare, the lower the proportion of household expenditure devoted to food.

Source:

US: US Consumer Expenditure Interview Survey, 2005

Taiwan: Survey of Family Income and Expenditure in Taiwan, 2005.Mexico: Encuesta National de Ingresos y Gastros de los Hogares, 2002

Thailand: Thailand Household Economic Survey, 2001Indonesia: Euromonitor International from national statistics, 2006, processed

The US as the country with the highest GDP per capita allocated less than 20% of it householdexpenditure for food whereas other countries in the sample allocated more than 20% of itshousehold expenditure for food. Taiwan, Mexico and Thailand allocated 20% -40% householdexpenditure for food, while Indonesia allocated more than 50% of its household expenditure forfood.

It can be also be seen from the table that Indonesia has the lowest transportation expenditure ascompared to other countries with the US as the country with the highest relavative This might beexplained from the fact that the fuel cost in Indonesia is subsidized by the government whereas

in other countries they are more or less priced according to market price.

Considering the continuing increas in the Indonesian GDP as well as the increase of itsGDP/capita, we can expect that the proportion of income devoted to food in Indonesia will stillfurther decreased. Whereas, for the proportion for income devoted to transportation is expectedto be increasing as the Indonesian government is expected to further decrease the amount of fuelprice subsidy in order to be able to allocate expenditure devoted for the oil subsidy to othersectors directly related with the welfare of the common people.

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20%

40%

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120%

US Taiwan Mexico Thailand Indonesia

Comparative Percentage of Household Expenditure

Others

Education

Transports

Health

Housing

Clothing

Food
http://www.bls.gov/cex/csxshare.htmhttp://www.bls.gov/cex/csxshare.htm

household expenditures analysis_rms

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