Indonesian Food Prices Rise on Fuel Fears

Senin, 26 Maret 2012 | 09:30

A week before a likely increase in the price of fuel, customers at markets are already complaining of rising costs for basic goods.The government on Sunday plans to raise the subsidized fuel price by 33 percent to Rp 6,000 (65 cents) per liter, although it will announce its final decision on the policy on Wednesday.

But the prices of other goods and services are already rising.

Ratno, 43, who sells vegetables at the Kreo market in Tangerang, said vegetable prices have slowly gone up in the past two weeks, with chili recording the highest rise at more than 50 percent.

Onions and garlic have also become more expensive, he said.

“I don’t want it [the fuel price] to increase because the prices for everything else will be affected,” he said. “But what can we do? Even though we don’t agree, the government will surely raise the fuel prices, so we will just have to go along.”

Sutirno, who has run a stall selling essentials for two decades, noted similar trends over the past two weeks.

“The rise that’s really been felt is the one for cooking oil,” he said. “I buy cooking oil from agents every three days, and every time the prices have increased.”

He said this hike in prices has significantly cut into his profits and he worries prices for all goods will rise once the higher fuel price becomes official.

Elin Indriani, a housewife from Tangerang’s Ciledug, said she was concerned the fuel price increase will push up the cost of running her household and make the milk she needs for her three young children unaffordable.

State railway operator Kereta Api Indonesia is already preparing to raise train fares for non-economy class tickets in anticipation of the new fuel policy.

Sulistyo Wimbo Hardjito, the operator’s commercial director, said he hoped the business and executive class fare increases would be less than 10 percent. Economy class fares are regulated by the government.

Meanwhile, Sofyan Wanandi, the chairman of the Indonesian Employers Association (Apindo), said industries will have to raise the prices of their products and services following any increase in the fuel price.

He estimated that the prices of industry products will have to increase 5 to 10 percent to accommodate the 33 percent rise in the price of subsidized fuel.

“We support the increase in fuel prices as long as the [savings from the] fuel subsidy are then used for infrastructure,” he said. “Because everyone will be able to enjoy this [infrastructure development] later, not only enterprises but also the people.”

House of Representatives Speaker Marzuki Alie earlier this month urged businesses not to exploit the fuel price increase.

“We ask on entrepreneurs, who will have a direct influence on the fate of the consumers, to think about the interests of the people,” the Democratic Party legislator said.

Price speculators have been blamed for a shortage of diesel oil in Bontang, East Kalimantan, that has prevented thousands of local fishermen from operating.

Riza Pahlevi who leads the trade, industry and cooperative office of the Bontang district, admitted that only one agent is still selling diesel oil in the city.

And even those sales, Riza added, have been limited to 20 liters per head. Boats need between 10 and 30 liters of diesel oil a day.

Additional reporting by Tunggadewa Mattangkilang & Investor Daily

By Arientha Primanita, Dessy Sagita & Ivan Dasa Saputra