BPS: Inflation from Fuel Price Increase Can Be Lowered If Social Assistance Programs are Carried Out Properly

JAKARTADAILY.ID – Head of the Central Statistics Agency (BPS) Margo Yuwono reminded everyone that the rise in fuel costs could inadvertently raise the rate of poverty in the country. 

Margo asked all parties to reflect on what happened in 2005 when fuel prices rose by 32 percent, and increased again in October of that year by 87 percent, which ultimately drove inflation to 11 percent.

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According to Margo, the impact of inflation from the increase in the price of fuel oil (BBM) can be suppressed, provided that the distribution of social assistance is carried out properly.

Margo revealed that this occurred during the increase in fuel prices in 2013 and 2014 where inflation was recorded lower than when the fuel price increase was in 2005.

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"Compared to 2005, the impact of the fuel price hike is lower because in 2013 and 2014 the social assistance policy was good so that the impact of inflation could be suppressed," he said.

Margo said that the government had raised the price of fuel, gasoline by 32.6 percent and diesel by 27.3 percent, in March 2005. The government then increased the price of fuel again in October 2005, when gasoline rose 87.5 percent and diesel by 104.8 percent. Inflation then broke to the level of 17.11 percent.

In 2013, BPS noted that the government also increased gasoline by 44.4 percent and diesel by 22.2 percent. Inflation in 2013 reached 8.38 percent. The increase was again carried out in November 2014, gasoline rose 30.8 percent and diesel 36.4 percent. The inflation rate was recorded at 8.36 percent.

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Learning from the experience in 2005, said Margo, the inflation rate at that time reached 17.11 percent because the government raised fuel prices twice in March and October.

In 2005, the government increased the price of fuel where gasoline increased by 32.6 percent and diesel by 27.3 percent in March 2005. Then, in October 2005, the government again increased the price of gasoline to 87.5 percent and diesel by 104.8 percent.

Not only in 2005, but the government also raised fuel prices in 2013 and 2014, where the increase in fuel prices made the inflation rate reach 8.38 percent and 8.36 percent, respectively.

According to Margo, the impact of the increase in fuel prices in 2013 and 2014 was relatively lower than in 2005 because the social assistance policies in 2013 and 2014 were better. This has an impact on reducing inflation, especially in the middle and vulnerable groups.