Jenny Grant, Jakarta – Tension over soaring prices once again spilled over into rioting yesterday in East Java.

Rioters smashed windows, burned goods and forced shopkeepers to slash prices on basic foodstuffs.

Dozens of young men riding motorbikes attacked food and textile shops, just a day after riots in three other towns on the main Indonesian island, officials said.

The Kompas newspaper said the rioters swept through the Balung district, 24 kilometres south of Jember, attacking textile, food and car spares shops.

"Right now all the shops in Jember are closed because of the attack yesterday," said Ayu, a telephone operator in Jember. She said Jember was tense and residents were afraid of further attacks on shops or homes.

Balung police said the situation was calm yesterday and had returned to normal.

During the riots, the mob destroyed four shops and forced owners to drop prices on nine main food items, which include rice, sugar, cooking oil and salted fish.

One textile shop had about 100 rolls of cloth burned by the mob. Police arrested three people.

Prices at the local Kalisat market in Balung fell after the riots, with shopkeepers afraid to sell at high prices in case shops were attacked.

Shopkeepers sold cooking oil for 2,000 rupiah (HK$2) a litre, half the price of the day before, while the price of sugar fell to 1,500 rupiah from 2,000 rupiah a kilo.

"I don't want to talk about the situation, it's too dangerous," said one goldsmith.

Hundreds of youths on motorbikes attacked shops in Jember on Wednesday, following similar attacks in nearby towns.

Food prices have jumped 100 per cent on some basic food items as inflation takes its toll. The Government was forced to upgrade its inflation target from nine per cent to 20 per cent after pressure from the International Monetary Fund.

The price rises have come during the sensitive fasting month of Ramadan when demand for food rises for feasting after sunset.

The Government aims to import two million tonnes of rice from Thailand and Vietnam after a failed harvest last year caused by an unusually long drought.

"The Government does not want to risk food shortages, that's why we are importing," said State Minister of Food Affairs Ibrahim Hasan.

He said the fasting month and Lunar New Year, which coincide this year, would put pressure on government rice stocks. He also said rice crops due this month would be late.

The military claims two million people have already lost their jobs since the financial crisis began in August.

President Suharto unveiled a tough reform package on Thursday that includes slashing a costly government fuel subsidy.

Electricity and fuel prices are expected to rise when the subsidy is lifted, which could spark widespread protests from poor Indonesians.

A timetable has not yet been announced, but analysts said the subsidy would be lifted after the presidential elections in March.

Although facing widespread opposition, Mr Suharto is expected to stand for a seventh term.