TEMPO.CO, Jakarta - Finance Minister Chatib Basri has said that the recent restrictions on subsidized fuels and the increased prices of non-subsidised LPG will not have a considerable effect on August inflation rate. "The inflation is insignificant," said Chatib on the sidelines of an event at the ministry at Lapangan Banteng on Tuesday, 12 August 2014.
Chatib admitted he was ignorant of the exact inflation data for August. Previously, the Coordinating Minister for the Economy Chairul Tanjung received a recommendation from state-run oil and gas company PT Pertamina to increase the price of 12 kg LPG canisters. But the recommendation does not necessarily mean an immediate price hike since the government is the only one with the authority to change LPG prices.
An economist from the Institute for the Development of Economy and Finance, Enny Sri Hartati, said the increased prices of 12 kg LPG canisters may cause consumers to shift to the subsidized 3 kg canisters. If that is the case, the budget for gas subsidy is bound to balloon.
The price hike was announced in the wake of the government's restriction of subsidized fuel known locally as the Premium. The restriction is enforced to help curb the spike in the consumption of subsidized fuels, which was first suspected when the data of subsidized fuel consumption for the first semester of 2014 showed Indonesia has consumed more than half of its quota of subsidized fuel.