"We predict an inflation rate between 8 percent and 8.5 percent if the government raises the price of diesel oil by 22 percent and premium gasoline by 44 percent," Head of Indonesia Research of Citi Securities Ferry Wong said.Jakarta (ANTARA News) - Citi Securities has predicted that if the government realizes its plan to increase subsidized fuel oil prices, it will trigger an inflation of about 8 percent to 8.5 percent.
"We predict an inflation rate between 8 percent and 8.5 percent if the government raises the price of diesel oil by 22 percent and premium gasoline by 44 percent," Head of Indonesia Research of Citi Securities Ferry Wong said after attending a seminar on "Economic and Political Outlook: Pr-election Landscape: Challenges and Opportunities" here on Thursday.
Herry said that the government`s policy to increase subsidized fuel oil prices would slightly affect the investors, particularly with regard to the production cost. But it would only last for a short term.
"The impact will only take place in short term. It will last for about three to four months. After that it will return to normal," noted Ferry.
He said that big companies in Indonesia had been using fuels with international prices so that they would not feel severe impact of the subsidized fuel price rises.
"The real impact would be felt more by small and medium firms. They have not yet used non-subsidized fuels so far," said Ferry.
Ferry added that the price of gasoline per minimum wage, in Jakarta in particular, had been very low compared with that in the past nine years so that it was predicted that it would not affect the people`s purchasing power to much.
"In 2004, gasoline price was Rp1.800 while the minimum wage was Rp500 thousands. Now the price of gasoline is Rp4.500 while the minimum wage has reached Rp2 million. This means that the people's
purchasing power should not be weakened too much," Ferry said. (*)
Editor: Heru Purwanto
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