Jakarta – Around 2,500 workers rallied in front of Indonesia's presidential palace on Monday demanding the government drop plans for a 30.1 percent fuel price hike later this month. There were no reports of trouble from the protesters who shouted slogans under the watchful eyes of 200 policemen and dispersed by midday.

Raising fuel prices is a sensitive issue in poverty-stricken Indonesia and sparked riots that helped topple former President Suharto three years ago.

Indonesia's parliament reached agreement on the price hike with the government late on Friday. It is still subject to approval from the parliamentary budget commission and a final plenary hearing expected later this month.

The government raised prices by an average of 12 percent last October but aborted plans for a further 20 percent hike across the board in April, fearing it would add to social instability. Consumers are also set to bear a 20 percent increase in electricity prices later this month, placing more financial hardship on the country's millions of poor.

The government is under mounting pressure to raise heavily subsidised utility prices in order to help plug its problematic budget deficit which international lenders have warned could balloon to 6 percent of gross domestic product (GDP) unless urgent measures were taken.

Fuel is the biggest component of the government's subsidies. Parliament and the government also agreed on Friday to contain fuel subsidies at 55.5 trillion rupiah ($4.96 billion) this year.