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Fuel price cut to ease inflation in April: BI
Bank Indonesia says lower fuel prices will have a significant impact on the consumer price index (CPI) in April if it is followed by a reduction in transportation fares.
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Intercity and interprovincial buses wait for passengers at Pulogadung bus terminal in East Jakarta. ( kompas/Agita Tarigan)
B
ank Indonesia (BI) says lower fuel prices will have a significant impact on the consumer price index (CPI) in April if it is followed by a reduction in transportation fares.
Logically, a cut in fuel prices eases pressure on inflation, which would ease further if fares were also lowered, said BI senior deputy governor Mirza Adityaswara on Friday.
"If [we relied only on] the cut in fuel prices while fares remained the same, the impact on inflation would be insignificant. So, adjustments in the transportation sector are necessary," Mirza said in Jakarta on Friday.
The Central Statistics Agency (BPS) reported that inflation stood at 0.19 percent in March, bringing more hope for deflation in April after the fuel price cut.
Year-to-date inflation stood at 0.62 percent, while the year-on-year figure was at 4.45 percent. Indonesia’s core inflation in March stood at 0.21 percent. Meanwhile, year-on-year core inflation was 3.5 percent.
The government cut subsidized fuel prices by Rp 500 (4 US cents) effective April 1, which is expected to result in a reduction in transportation fares by 3 percent.
Following the fuel price announcement, the Transportation Ministry lower regulated fares for intercity and interprovincial public transportation and ferries by 3.5 percent and 3.38 percent, respectively. The new fares come into effect on April 7. (bbn)
