Jokowi: Subsidized Fuel Price Hike Could Add 1.8% to Inflation

The increase in subsidized fuel prices will impact inflation. President Joko Widodo (Jokowi) estimates that inflation will increase by 1.8% as a result of the fuel price hike.

“Based on calculations from the ministers yesterday, inflation will rise by 1.8%,” Jokowi said at the 100 Economy Sarasehan in Jakarta, as reported by *Katadata.co.id*, Wednesday (7/9/2022).

This increase will occur if the government does nothing. However, Jokowi ensured that there will be intervention. Therefore, he instructed local governments to participate in efforts to curb inflation.

“We must act, like during the Covid-19 pandemic,” Jokowi said.

For information, Pertamina has increased the price of subsidized Pertalite fuel (RON 90) to Rp10,000 per liter on September 3, 2022, from Rp7,650 per liter previously. Similarly, the price of Solar has also increased to Rp6,800 per liter from Rp5,150 per liter previously. Furthermore, Pertamina also increased the price of Pertamax (RON 92) to Rp14,500 per liter from Rp12,500 per liter previously.

The increase in subsidized fuel prices will impact the increase in the prices of goods due to the increase in transportation costs. Therefore, local governments are requested to cut 2% from the General Transfer Fund (DTU), consisting of the General Allocation Fund (DAU) and the Revenue Sharing Fund (DBH).

These funds are expected to cover the cost of transporting food from production centers to various regions.