Lenny Tristia Tambun, Jakarta – The government expressed concern on Thursday that inflation in five provinces on Sumatra Island is rising far higher than the national average in the face of imminent hike in subsidized energy prices that may trigger commodity prices to soar.
The annual inflation was recorded at 4.94 percent in July as people can still buy subsidized gasoline product Pertalite at half a dollar a liter. Still, President Joko "Jokowi" Widodo warned that the consumer price index is especially high in those five provinces.
According to the Central Statistics Agency (BPS), inflation was recorded at 8.55 percent in Jambi, 8.01 percent in West Sumatra, 7.77 percent in Bangka Belitung, 7.04 percent in Ricau, and 6.97 percent in Aceh.
The president urged the local governments to find out the cause of soaring prices in those provinces.
"Please take a look at the details what the real cause of this problem so that we can solve it together and bring the inflation below 5 percent," Jokowi said during a special meeting on inflation reduction at the State Palace in Jakarta.
"Jambi must be cautious because its inflation already reached 8.55 percent," he added.
The president claims that staple food prices remain manageable, noting that the average rice price stood at Rp 10,000 per kilogram – less than half the rice price in China.
"Last week we won an award from the International Rice Research Institute for our food security system," he said.
The Trade Ministry recently launched its affordable cooling oil brand which sells for less than a dollar per liter.
The central government's intervention to tame inflation has proved costly. State spending on energy subsidies which cover liquefied petroleum gas, electricity for low-income families, and subsidized fuel products is expected to top Rp 502 trillion this year.
The government has indicated that it will raise fuel prices to reduce pressure on the State Budget.