Analyst: Middle class most affected by rise in non-subsidised LPG prices

Jakarta (ANTARA) - Director of the Energy Shift Institute, Putra Adhiguna, assesses that the middle class is the group most affected by the price increase of non-subsidised LPG and fuel. In an interview with ANTARA in Jakarta on Monday, Putra stated that the government needs to take appropriate steps to curb pressure from the energy sector. According to him, direct cash subsidies represent one of the most effective solutions. “Direct cash subsidies are one of the best solutions, given that poor households receive lower subsidies compared to more affluent groups, and controlling subsidy distribution is also crucial,” he said. He emphasised that controlling subsidy distribution is key to ensuring aid is targeted correctly and truly reaches those in need. The mechanism for controlling distribution, including the use of technology such as biometrics, must be implemented consistently. Thus far, various control efforts have often been hindered by political tug-of-war. “In energy subsidy distribution, the key is consistency. Efforts to control it have repeatedly advanced and retreated due to political pulls. Currently, it must be ensured that it does not fade into a short-term project, while continuously being improved,” he said. Regarding the possibility of additional government interventions, he believes the main focus should not be on adding stimuli, but rather on improving subsidy distribution governance. He also highlighted the back-and-forth in subsidy policies that often leaves the public bearing the burden of price increases before receiving aid. Therefore, better policies are needed so that policy implementation and aid distribution run in sync. “The back-and-forth on subsidies often occurs because the public usually only gets the burden while they have not yet received direct assistance, so it needs to be orchestrated better,” he explained. Furthermore, Putra warned of the risk of second-round effects remaining open as long as the conflict between the US and Iran has not subsided. Rising energy prices could spread to various other sectors. “The risk remains as long as the conflict has not subsided. There is no other way, given the continuously rising global prices, but controlling subsidy distribution is key,” he said. As is known, the price of 12kg non-subsidised LPG has risen from Rp192,000 per cylinder to Rp228,000 per cylinder, or an increase of 18.75%. This LPG price hike is the first since 2023.