TEMPO.CO, Jakarta - Institute for Development of Economics and Finance (INDEF) Directpr, Enny Sri Hartati, said that the rise of LPG price would trigger public expectation of inflation since the rise coincides with the fuel price increase plan. "The rise of LPG price) has an impact to inflation, but it’s a small impact, because the 12-kg LPG is only for households," Enny said.
However, the rise of LPG, which almost coincides with fuel price raise plan, will give rise to anxiety among certain people and it will impact other commodities. If the rise (of LPG price & fuel) has different momentums, it would result a small inflation.
Let's take a look at street sellers as an example. Enny pointed that a seller will probably think of raising other commodities' price in order to avoid making lower income when the price of other commodities raise. "If everyone thinks that way, inflation will be higher. The aggregation of economic activities due to the expectation of inflation will trigger the rise of prices twice," she explained.
On the contrary, the rise of LPG price will also affect people purchasing power because LPG is the last demand.
"For example, someone earning Rp 2 million per month will reduce spending for other commodities because he has to spend more on LPG. That way, sellers of those commodities will have lower income," Enny said.
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