Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Indonesia braces for fuel hike protests, soaring inflation

Economy Sep 05, 2022 08:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Motorcycle drivers wait in line to buy subsidised fuel at a petrol station of the state-owned company Pertamina after the announcement of a fuel price hike, in Bekasi, on the outskirts of Jakarta, Indonesia, September 3, 2022. REUTERS/Ajeng D

By Stefanno Sulaiman and Yuddy Cahya Budiman

JAKARTA (Reuters) -Indonesian authorities were on Monday bracing for mass protests after an unpopular hike in fuel prices, a move the government said could see inflation increase to 6.8% this year, though with limited impact on economic growth.

President Joko Widodo bit the bullet and raised subsidised fuel prices by about 30% on Saturday to rein in a ballooning energy subsidy budget, ending weeks of deliberation about the impact on the public and spectre of mass protests.

Police beefed up their presence in the capital Jakarta and deployed officers to hundreds of petrol stations ahead of a planned demonstration on Tuesday by workers' groups.

Small rallies took place over the weekend and again on Monday, with tyres burned and some roads blocked as students and workers vented anger over a jump in fuel prices amid rising food costs, with the public still reeling from the impacts of COVID-19.

"We'll continue to speak out about this problem until the government lowers the fuel price," said protester Ranto Mombulan a member of the Islamic Student Association.

"The government is issuing policies without taking into account the wellbeing of the people who are still recovering from the pandemic."

National police chief Listyo Sigit Prabowo on Monday told regional authorities to step up their engagement with the public to explain why the fuel hike was necessary and keep tempers from flaring.

Indonesia's high energy subsidy budget had kept a lid on its inflation rate even when global policymakers were hiking rates at a furious pace.

The fuel hike would cut subsidy spending by about 48 trillion rupiah ($3.22 billion) this year to 650 trillion rupiah, Deputy Finance Minister Suahasil Nazara said, but it would also set inflation on an accelerating trajectory.

Finance Ministry official Febrio Kacaribu on Monday said economic growth this year could still reach 5.2%, from 3.69% in 2021, and authorities would offset the fuel price increase by ensuring adequate food supply to control inflation, keeping the rate in a range of 6.6% to 6.8%.

Suahasil said the price hike would push up inflation, but the monthly rate should normalise in November.

"Usually, inflation rises quickly in one or two months and by the third month, it begins to normalise," he said.

'WHY CREATE THIS CHAOS?'

The rising prices could anger some Indonesians whose lives were just returning to normal after taking an economic hit from the pandemic.

"Why, why the fuel price going up again, why?" said Ismail, a motorcyclist with a ride-hailing app in the capital Jakarta, who like many Indonesians goes by only one name.

"Now it has only been three months since we started to live our life again, the price of fuel has increased. Why create this chaos? Everything is messed up."

Economists on Monday said Bank Indonesia (BI) will step up the pace of interest rate increases after the fuel price hike, having raised borrowing costs by 25 basis points last month.

The August annual inflation rate was 4.69%, already above the central bank's target range of 2%-4% for a third straight month, due to high food prices.

"Given the fact that price pressures had been building for some time this year even before the fuel effect, the degree of broadening in the price effects will be the key thing to watch now," said OCBC Bank economist Wellian Wiranto, predicting inflation will top 7% in the coming months.

Jokowi, as the president is widely known, said on Saturday the price hike was his "last option", due to pressure building up on the fiscal front.

($1 = 14,920.0000 rupiah)

Indonesia braces for fuel hike protests, soaring inflation
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email