en.Wedoany.com Reported - Indonesia's state-owned oil company Pertamina has increased the price of its Pertamax series fuel by about one-third, with the 92-octane Pertamax rising to 16,250 Indonesian rupiah (approximately $0.9053) per liter, a 32.1% increase. The price of Pertamax Green, a 95-octane ethanol-blended fuel, rose from 12,900 rupiah to 17,000 rupiah, an increase of 31.8%. The price of the subsidized 90-octane fuel Pertalite remained unchanged.

Behind this price hike are investor concerns over government spending. The Pertamax series fuel is typically not subsidized, and it remains unclear whether Pertamina has received compensation for maintaining original prices since the Russia-Ukraine conflict. Indonesia's Finance Minister stated that the impact of the price increase on inflation may be limited. This comes after Bank Indonesia unexpectedly raised interest rates for the second consecutive month to bolster confidence in the local currency. Budget data released last week showed that subsidy costs for fuel, electricity, and fertilizers surged 208% year-on-year.

Purbaya Yudhi stated that since public transportation does not use this type of fuel, the impact of the price increase on inflation is likely minimal. The overall annual inflation rate in May hit an eight-month high of 3.08%. Radhika Rao, Senior Economist at DBS Bank, noted that the affected fuel accounts for 7% of the domestic fuel market and 7.5% of energy consumption in the transportation sector. She pointed out that, in addition to monetary policy adjustments, fiscal policy also needs to adopt a defensive stance to support the economy. Masgal Carta, a worker in Bandung, West Java, said the sudden fuel price hike will exacerbate his financial pressure, noting that while his income has not changed, the prices of basic consumer goods are already rising, and the sudden increase in fuel for his primary mode of transportation came as a surprise.

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