Minister Darmin: Fuel Price Hike Could Lead to Higher Inflation

TEMPO.CO, Jakarta - The Coordinating Minister for Economic Affairs Darmin Nasution said that global crude price hike could lead to fuel price increase at home and higher inflation.

“If [fuel prices] increase, the inflation rate will certainly be higher,” Darmin said yesterday during a meeting with the House of Representatives’ (DPR) Budget Committee.

Read also: Energy Minister Jonan Ensures Adequate Stock of Fuel

Darmin explained that rising fuel price at international market adds more burden on the government to increase subsidy allocation should domestic fuel prices are left unchanged.

The government is keeping energy subsidies allocation in the state budget (APBN) particularly for diesel fuel, 3 kg LPG and biofuel.

Read also: Subsidized Fuel Prices to Remain Until June 

“We can raise the subsidy to Rp60 trillion, instead, we better increase [fuel prices],” Darmin.

The former governor of Bank Indonesia said that the government has yet to issue any policy to respond to global crude price hike, particularly ahead of Eid al-Fitr.

The government earlier had tried to curb volatile foods price inflation since the turn of the year by maintaining buffer stocks.

The Central Statistics Agency (BPS) reports year-to-date inflation rate of 1.67 percent and year-on-year inflation of 4.33 percent.

However, in the past three months, inflation has been affected by administrated prices particularly electricity price increase in the 900 VA household customer category.

Therefore, the government will manage increases in both fuel and electricity prices to achieve end-year inflation target of four percent plus or minus one percentage point.

ANTARA