Photo: A number of two-wheeled vehicles queue to fill Pertalite type fuel at the Kebayoran Lama gas station, Jakarta Tuesday (16/8/2022). (CNBC Indonesia/ Tri Susilo) Jakarta, CNBC Indonesia - People are currently still waiting for what policies and steps the government will take in regulating the price of Pertalite type of fuel oil (BBM).
If Pertalite goes up, how will it affect the lower middle class?
Pertalite consumption in Indonesia reaches 80% of the total gasoline, so the increase in Pertalite prices will certainly encourage an increase in inflation, which may increase.
The Central Statistics Agency (BPS) earlier this month announced Indonesia's inflation data for the July 2022 period, which grew 0.64% compared to the previous month (month-to-month/mtm).
On an annual basis (year-on-year/yoy), the inflation rate accelerated. Inflation in July 2022 was recorded at 4.94% (yoy), higher than the previous month's 4.35% and the highest since October 2015.
In the inflation basket, gasoline has a weight of 4% according to data from the Central Statistics Agency (BPS). So, for example, if fuel prices increase by 10%, inflation can be pushed up to 0.4 percentage points against inflation.
Historically, in 2014, for example, when the price of Premium type of fuel which was the most consumed at that time, it was increased in November by up to 30%. Inflation then shot up to 8.36% (yoy).
The same thing happened the year before. The government raised fuel prices in June 2013 which triggered an increase in inflation to 8.38% (yoy).
The impact of the fuel price hike is not only on the economy, but will also have an impact on the social aspects of Indonesian society.
Fuel is indispensable for the company's operations, so if the price becomes more expensive, it will burden the production costs of almost all sectors and business lines.
As a result, the company will minimize operational costs, for example by stopping the recruitment of new employees to Termination of Employment (PHK).
The increase in fuel prices has the potential to increase the unemployment rate which will certainly increase the poverty level of Indonesia. In fact, as of March 2022, BPS has reported a decrease in the poverty rate after the pandemic.
The poverty rate as of March reached 9.54% or 26.16 million people. Down 0.6 points or 1.38 million people. Meanwhile, compared to September 2021, the decline in the poverty rate reached 0.17 points or 0.34 million people.
However, the poverty line has increased by 3.975% compared to September 2021 to IDR 505,469 in March 2022.
It is not impossible, if the unemployment rate and poverty rate increase, it will cause chaos until demonstrations.
If you look back in 2013, hundreds of students and workers held demonstrations against the increase in fuel prices in front of the State Palace, Pertamina, and the Ministry of Energy and Mineral Resources (ESDM).
This should be a lesson. Before the government raises fuel prices, it is better to pay attention to several points such as the inflation rate and people's purchasing power.
Indonesian people's consumption contributes as much as 50% of GDP, so that if inflation rises, it will certainly limit public consumption and help bring down GDP.
Signs of an increase in Pertalite fuel prices have often surfaced, both from the Coordinating Minister for Economic Affairs Airlangga Hartarto and the Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia.
"The economical price of Pertamax is Rp. 15,150 but retail is still Rp. 12,500 per liter. And Pertalite is Rp. 13,150 but retail is Rp. 7,650 per liter," said Coordinating Minister Airlangga in a press conference on the Financial Note and the 2023 State Budget Bill, Tuesday (16/8/2022).
Coordinating Minister Airlangga also compared Pertalite and Pertamax fuel prices in Indonesia, which are still far below the price of fuel from neighboring countries. For example, Thailand sells fuel at a price of Rp. 19,500 per liter. Then Vietnam Rp 16,645 per liter and the Philippines reached Rp 21,352 per liter.
Meanwhile, Bahlil realized that the increase in domestic fuel prices could cause turmoil in the community. However, the state's financial condition in restraining the increase in fuel prices has stagnated.
"I conveyed how long our state budget will be strong in facing higher subsidies, so friends, please also convey to the people that it feels like holding on to fuel prices like now, feeling is that we must be prepared if, say, the increase in fuel prices occurs. , said Bahlil.
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