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Retail prices increases as govt plan to raise fuel prices drag on, economist says

Tempo - September 1, 2022

Francisca Christy Rosana, Jakarta – Center of Economic and Law Studies (Celios) director Bhima Yudhistira on Thursday believes the psychological effects of the government's plan to increase prices of subsidized fuel sold by state-energy firm Pertamina is already evident.

He believes a plethora of businesses has started to raise the prices of their goods, which will only impose more pressure on inflation.

"A number of goods have gone up in price. Psychologically, many businesses are using the moment to adjust retail prices," said Bhima to Tempo on Thursday, September 1.

As of now, the government reportedly intends to increase the prices of fuels that are partially subsidized by the government, namely Pertalite and Solar (diesel fuel). In the latest report from Tempo Magazine, the government plans to add Rp2,000 up to Rp3,000 to the existing prices of the aforementioned fuel per liter.

Bhima estimates that the planned increase in fuel prices will encourage businesses that previously withheld any price increase as the public's buying power was still affected by the Covid-19 pandemic.

On the other hand, Bhima urged the government to immediately take a stand on the fate of subsidized fuel prices. As the government drags on this decision and does not come to a concussion only shows the internal incompatibility of the current Cabinet, says Bhima.

"The fuel price increase is not a populist decision. Many State Ministers are still not in agreement," he suspects.

Source: https://en.tempo.co/read/1629271/retail-prices-increases-as-govt-plan-to-raise-fuel-prices-drag-on-economist-say