"July is when there are long school holidays, the new academic year begins and it is also the start of the fasting month, so the inflation rate will be high. So rationally, the price of fuel oil will not increase in mid 2012," BPS Director for Price Statistics Sasmito Hadi Wibowo said here on Monday.
If the government wishes to raise the price of fuel oil, it can be done in September or October after the long school holidays and most parts of the country have entered harvest time, he said.
"September comes after the festivities of the fasting month, Lebaran, so consumption will decline. While October will be the peak of the second harvest," he noted.
He also said the pressure on the inflation rate is usually low during these two months.
"If the price of fuel oil is raised before and after these two months, it will have a huge impact on the inflation rate," he warned.
He said the calendar year inflation rate would be low, even if the price of subsidized fuel oils is raised in September or October.
"It will not reach the government-set inflation rate target of 6.8 percent. It may stay at 6 percent, plus and minus (1 percent) if the price of subsidized fuel oils is raised in September," Sasmito said.
He added that each increase of Rp500 per liter would contribute 0.3 percent to the inflation rate. Thus, if the fuel oil price is raised by Rp1,500 per liter, it will contribute 0.9 percent to the inflation rate.
Under the revised 2012 state budget, the government has targeted the inflation rate to reach 6.8 percent this year, or higher than the assumed inflation rate of 5.3 percent.
The inflation rate target is lower than the 7 percent set in the draft revision of the 2012 state budget, after the House of Representatives (DPR) and the government decided not to raise the electricity tariff.
(Uu.S012/INE/KR-BSR/S012)
Editor: Priyambodo RH
Copyright © ANTARA 2012
