November is Perfect to Raise Fuel Prices: Analysts

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  • TEMPO.CO, Jakarta – A number of analysts said that November is the most appropriate time for the government to raise subsidized fuel price. For one thing, November usually posts lower inflation rate than December, hence a fuel price hike will not be too hard on the public.

    Latif Adam from the Indonesian Institute of Sciences (LIPI) said that raising fuel prices next month will not disrupt the inflation rate, as it will only trigger prices up to three percent. "It is tolerable since the current inflation is around four percent. So the total inflation is still safe at below seven percent," Latif told Tempo yesterday.

    Still, he said, the government must prepare a social policy program to help the people cope with the inflation coming from a raised fuel price. "Rice for the poor, social assistance, and other policies must be prepared as a bumper," said Latif.

    University of Indonesia economist Faisal Basri said that if fuel prices are raised in November, Joko Widodo's administration will have greater fiscal space. "So by the time we enter 2015, the heaviest burden would be gone," Faisal said in Banyuwangi, Tuesday.

    Faisal suggested increasing prices by Rp3,000 per liter to Rp9,500 per liter, so the inflation expectation will not linger. "But the fuel price hike must be accompanied by the availability of adequate public transportation in big cities," he said.

    BNI senior economist Ryan Kiryanto also agreed that if subsidized fuel prices are raised increased as soon as possible.

    According to his calculation, if fuel prices are raised this year, the year-end inflation will be at 6.5 percent at max, after taking into account the inflation due to Christmas and New Year holidays. That way, he said, by 2015 Indonesia's burden from inflation will be lighter.

    Meanwhile, Deputy Finance Minister Bambang Brodjonegoro yesterday said he was summoned by President Joko Widodo to the palace to discuss the State Budget. In the meeting, he said, they also talked about the fuel subsidy. Personally, Bambang recommends raising subsidized fuel prices this year even though it is not an ideal time what with the approaching Christmas and New Year holidays