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Rising electricity tariff carries huge psychological effect, says expert

Tempo - July 1, 2022

Riani Sanusi Putri, Bisnis, Jakarta – The Center of Economics and Law Studies (Celios)'s director, Bhima Yudhistira, on Friday said the government's decision to increase the electricity tariff for homes with over 3,500VA will have a bigger psychological impact on the population as many will fear the rising cost of living."The effect will be unnoticeable towards consumption as there will be more psychological effect as households that have started to spend as the pandemic is ceasing will worry about the rising cost of living in the next couple of months," Bhima told Tempo on Friday, July 1.

He believed such a situation will only make the upper economy society save money. Statistics Indonesia (BPS) in September last year found that this demographic has 20 percent more spending and contributed to 45.7 percent to the total national consumption.

"As a result, the DPK (third party funds) of big customers will increase, and this is actually counterproductive to economic recovery," Bima explained.

As of Friday, July 1, non-subsidized electricity tariff will start to increase based on the Energy and Mineral Resources Minister's Letter No.T-162/TL.04/MEM.L/2022. Bhima said that the most important decision currently taken by the government is to hold back the electricity tariffs of industrial groups, such as hotels, restaurants, and households under 1,300 VA.

PLN President Director Darmawan Prasodjo explained that the increase in electricity tariff is a form of adjustment to soaring macroeconomic indicators. In addition, the government together with PLN are aiming at maintaining economic stability amid rising inflation in a number of countries.

Source: https://en.tempo.co/read/1607620/rising-electricity-tariff-carries-huge-psychological-effect-says-exper