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Fuel limitation policy seen to push inflation rate in Indonesia

Publication Date : 13-08-2014


Indonesia's Central Statistics Agency (BPS) said the government’s fuel limitation policy would definitely affect people’s purchasing power.

The agency, however, has yet to calculate how much of an effect the policy will have on the inflation rate this month.

The Downstream Oil and Gas Regulatory Agency (BPH Migas) has stopped selling subsidised diesel fuel and subsidised gasoline in Central Jakarta, and has prohibited gas stations in Java, Bali, Kalimantan and Sumatra from selling subsidised diesel fuel between 6pm and 6am to stay within the national subsidised fuel quota of 46 million kilolitres.

BPS deputy chairman for production statistics Adi Lumaksono said the policy would decrease revenues posted by all gas stations.

“Most public transportation and various industries use diesel fuel, which will prompt their costs to increase,” he said on Tuesday. “However, we should calculate how much it will influence inflation in August. We hope to announce it on Sept. 1.”

Adi said inflation would also be influenced by an increase in the cost of electricity produced by power plants that used diesel fuel and sold its electricity to the government, even though electricity prices to end consumers had been administered by the government.

The BPS earlier reported that monthly inflation hit 0.93 per cent in July and 4.53 per cent on a year-on-year basis, a relatively benign level considering that the central bank earlier estimated inflation could top a maximum 1.2 per cent last month when the nation observed Ramadhan and celebrated Idul Fitri, when food prices usually rise.


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