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aving become accustomed to stable fuel prices for decades, many Indonesians still find it difficult to adapt to the free-floating prices of gasoline designed by the economic team of President Joko '€œJokowi'€ Widodo.

Two months after the country'€™s new energy policy was implemented, low-income citizens said they preferred more predictability in fuel prices, citing the volatility in the prices of food and other strategic commodities.

'€œThe problem is that when fuel prices rise, the price of food and other goods increase. But, when fuel prices are lowered, food prices do not go down,'€ complained Jari, a 45-year-old motorcycle taxi (ojek) driver based in Tanah Abang, Central Jakarta.

President Jokowi late last year overhauled Indonesia'€™s gasoline pricing mechanism from being subsidized by the state to free-floating based on market prices, to redirect the burdensome and poorly targeted multibillion US dollar fuel subsidy spending to more productive expenses such as infrastructure projects.

In doing so, Jokowi first raised the locally known Premium gasoline by 30 percent to Rp 8,400 per liter in November. But an extreme drop in global oil prices enabled the government to cut fuel prices to Rp 6,600 in early January.

Off the government began a new custom: announcing monthly fuel pricing based on market prices. But since Indonesia is no longer a net exporter of oil, it imports crude materials for fuel, making it more dependent on exchange rate volatility.

The price of Premium currently stands at Rp 7,400, a rise from Rp 6,900 in early March and Rp 6,600 in February due to higher global oil prices coupled with the weakening rupiah.

The new pricing mechanism won both domestic and international acclaim for its greater good but people in the grass roots such as Jari are left confused in managing their finances after over four decades of enjoying fixed-and low-priced fuel subsidized by the government.

Not far from Jari'€™s base, at Bank Indonesia headquarters, officials continue to assure consumers that price increases this year will remain manageable, as fuel-price volatility should be tame.

'€œ[The implementation of free-floating fuel prices] would cause the prices to go up and down, but the changes will not be substantial,'€ BI deputy governor Perry Warjiyo said, arguing that the policy could help stabilize the long-term trend of inflation in Indonesia.

Official estimates show that inflation in Indonesia would become more stable after the implementation of the fixed-subsidy policy, with the annual consumer price index (CPI) expected to fall below 4 percent by the end of this year, from 6.4 percent in March.

Suahasil Nazara, the head of the Finance Ministry'€™s fiscal policy agency, also noted that the economic impact of fuel prices might not be as severe as many Indonesians think.

The existing perception among Indonesians, he explained, had created unwanted inflation expectations as businesses adjusted the prices of goods upward too drastically when there was a fuel-price hike.

'€œIn the past, the government regulated fuel prices in a far too rigid way '€” so rigid that people expected any movement in fuel prices to influence so many aspects of the economy, while the reality might actually not be that dramatic,'€ Suahasil, an economics professor from the University of Indonesia (UI), said in an interview.

Indonesia'€™s inflation reached double-digit figures in 2005 (17.1 percent) and 2008 (11 percent) when the government hiked the price of subsidized fuel to cope with the spike in global oil prices.

Indonesia was shifting to a regime where the price-formation mechanism would reflect the true reality, with the fuel price no longer seen as the sole reference of all prices in the economy, Suahasil said.