Marianne Kearney, Jakarta – Eddie, a former waterside thug, is not too worried about a local council's recently declared intention of clearing the city of illegal businesses such as his – a street stall where he sells fake branded bags.

He boasts that South Jakarta's local government would never be brave enough to close down the hundreds of illegal market stalls involved for fear of the boisterous demonstrations that would follow.

But what does worry him is last week's fuel-price rises. Already, his small stall is feeling the pinch. Fewer customers are arriving to survey his fake Gucci and Salvatore Ferragamo bags.

This, he says, is a result of common concern that with the rise in fuel prices, the cost of basic goods will shoot up. "It's extremely quiet and already the price of food has risen," says an adjacent stallholder, Yono, who sells sunglasses.

Like dozens of other stallholders, Yono started his own small business when his more lucrative job at a ceramics factory came to an abrupt end as a result of the 1997 Asian economic crisis.

Earning a living since then has been tough but manageable. But with prices set to rise, supporting his family in Surabaya could become very difficult.

The cost of fuel was raised last week by an average of 30 per cent. Next month, electricity prices will rise by 20 per cent, and economic analysts predict that inflation will rise to at least 10 per cent over the next two months.

The fuel-price hike has sparked violent protests in the streets of the capital but the government has said it will not review its decision.

Transport drivers are being subsidised to help offset the increase in their fuel prices but traders such as Yono and Eddie will receive little help to offset their rapidly increasing cost of living.

Illegal stallholders such as Eddie earn about 30,000 rupiah on a good day. If the sluggish trade continues, he and his fellow street workers will probably earn only 10,000 rupiah a day. It may be just enough to feed themselves and to pay the rent but it is not enough to support their wives and children living in Surabaya, Yogyakarta or Semerang.

A senior economist with the government-owned Danareska Research Institute, Dr Raden Pardede, says the number-one concern for most Indonesians, according to their most recent survey, was inflation. He predicts inflation will hit 10 per cent, the number of jobs will decline and the average income will also decline over the next few months.

Most Indonesians have been pessimistic about their job prospects and worried about their ability to buy new products since 1999, the latest Danareska survey reveals.

Nobody knows how many people become poorer as a result of these price increases, but Dr Pardede says that the number of people living below the poverty line is bound to increase.

With almost 50 per cent of Indonesia's population facing poverty, according to a recent World Bank study, the fear is that an even higher proportion will slip below the poverty line. "No doubt the poor will suffer more," says Mr Philip Clarke from the World Food Programme.

While he agrees the government could not continue to lose billions of dollars each year by keeping fuel prices at some of the lowest in Asia, he said the increases were bound to be far harsher on poor people.

He pointed out that the cost of diesel, the fuel which is more commonly used by poorer people, rose by 50 per cent while petrol, which is used by cars and therefore by the middle class, rose by only 25 per cent.

Mr Clarke predicted the poorer 20 per cent of the population would continue to need assistance for at least another 18 months.