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Giving Gas to Inflation

New Policies on Subsidized Fuel May threaten Baliís Plans to Keep Inflation Below 4.5%

(7/29/2012) Bali remains optimistic that the rate of the inflation for the island through the end of 2012 will remain at approximately 4.32%, somewhat lower than the 4.5% projected in the official provincial budget. Economist warn, however, that the rate of inflation could suddenly soar as a results of the government's plans to reduce the use of subsidized fuel.

I Gede Suarsa, chief of the Bali Statistic Bureau, see the rate of inflation during the first half of 2012 as “moderate.” The second half of 2012 may suffer inflationary influences resulting from increases in prices for basic commodities, religious holidays and year-end holiday celebrations.

As a member of the Regional Coordination Team for the Control of Inflation (TKPID), Suarsa said the team would work to keep the cumulative rate of inflation within plus or minus 4.5%.

The head of the Bali branch of Bank Indonesia, Dwi Pranoto, warned that while inflation in Bali remains relatively low, a potential exists for spikes in prices resulting from prices administered by the government. Chief among these is the price of fuel at the pumps and government plans to ban red-plated vehicles (official vehicles) from buying subsidized fuel beginning in August.