Jakarta (ANTARA News) - Indonesian government plans to raise the price of fuel at the pump will force down auto sales in Southeast Asia's biggest economy, the head of the automotive industry association said Wednesday.
"There will be a significant decrease (in sales) if the fuel price hike is followed by higher inflation and central bank interest rates," Bambang Trisulo told AFP.
Indonesian officials have announced plans to raise the price of premium gasoline to as much as 6,000 rupiah (65 cents) per litre, up 30 percent from the current 4,500 rupiah.
Although no new price has been set, many analysts say the expected 20-30 percent jump will lead to a spike in inflation and slow down Indonesia's overall growth for the year.
Trisulo said the association was estimating auto sales -- not including motorcycles -- would reach only 400,000 units by the end of this year, significantly down from earlier 2008 sales estimates of 520,000 units.
Preliminary data showed 185,000 cars were sold between January and April this year, Trisulo said. (*)