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Economy

Indonesians splurge when monthly income passes $375

TOKYO -- Middle-class Indonesian households ramp up saving and spending on luxury grocery items when their incomes exceed 5 million rupiah ($375) a month, according to a survey of Indonesian consumers by Deloitte Consulting Southeast Asia.

     In general, the term middle class in Indonesia covers households with monthly incomes ranging from 3 million rupiah to 10 million rupiah. The survey found that once a household's income climbs above 5 million rupiah a month, there is a large jump in the percentage of income socked away in savings and spent on luxury items related to leisure activities.

     For households making 5 million rupiah to 7.5 million rupiah, slightly more than 20% of income is devoted to such expenditures, a figure that jumps to 26% for incomes in the 7.5 million rupiah to 10 million rupiah range. That is because at this level income exceeds expenditures by a considerable amount, providing leeway in household budgets.

     At the same time, more than 10% of income is set aside as savings as these households prepare for future expenditures such as the purchase or replacement of durable consumer goods.

     For households with monthly incomes between 3 million rupiah and 5 million rupiah, food, clothing and other daily necessities account for 58% of total spending, and there is a definite limit to how much can be saved or used for luxury goods. 

     Stanley Song, the Deloitte director who oversaw the survey, points out that the results are important because businesses in Indonesia have to narrowly target sales to consumers.

     Conducted in December 2014 and January 2015, the survey polled some 2,000 households in five major cities, including Jakarta and Surabaya. It involved direct visits to consumers' households to inquire in detail about monthly buying habits, and took 2,000 hours to conduct.

(Nikkei)

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