Expert: LPG Price Hike to Raise Food Prices

TEMPO.CO, Jakarta – Agus Eko Nugroho, an economist at the Indonesian Institute of Sciences (LIPI), said the 12-kg LPG canister price hike would have direct impact on the production costs of food and beverages. According to Agus, food and beverage prices would increase due to the LPG price hike.

“The food and beverage prices are predicted to increase by 1 percent,” Agus told Tempo on Friday, September 12, 2014.

Agus explained that since gas was the energy component utilized by food and beverage industries, the LPG price hike would raise the production costs and, in turn, increase products' prices.

Agus said business owners should be informed earlier about the increased LPG price to give them a heads up about the LPG price. Agus revealed that business owners would not want to lose their consumers while considering their business sustainability.

Commenting on a rumor saying that business owners would convert to 3-kg LPG canisters, Agus said there was a regulation restricting business owners to do so. However, Agus added, if it happened, scarcity was inevitable.

“Rationally, business owners would convert [to 3-kg LPG canisters] to maintain their profit without increasing prices,” Agus said.

YOLANDA RYAN ARMINDYA