Analyst Says Increase in Non-Subsidised Fuel Prices is Appropriate and Has Minimal Impact on Inflation

Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, stated that the decision to increase the price of non-subsidised fuel is appropriate. Faisal believes that the rise in non-subsidised fuel prices will not have a significant impact on the inflation rate. “Every price increase certainly contributes to inflation, although the contribution from non-subsidised fuel to total inflation is far smaller compared to the contribution from subsidised fuel,” Faisal said when contacted by Republika in Jakarta on Sunday (19/4/2026). Faisal explained that the increase in non-subsidised fuel prices contributes to inflation at a relatively low level. This is because, he continued, non-subsidised fuel targets middle- to upper-class society. “For the upper class, I think their purchasing power is still relatively strong to absorb the increase in non-subsidised fuel prices,” Faisal added. Amid the rise in global oil prices, Faisal assessed that the government should rightly prioritise the lower class, who are more vulnerable to fuel price changes. Faisal noted that the absence of adjustments to non-subsidised fuel prices would instead create negative financial impacts for Pertamina and the state. “If it were not increased, it also raises the question of who would bear the cost,” Faisal said. Faisal reminded that Pertamina’s burden would grow larger if there is no adjustment to non-subsidised fuel prices. Faisal stated that this would have major consequences for Pertamina’s cash flow. “Non-subsidised fuel is increasingly adding to Pertamina’s burden. This should indeed be adjusted to international prices,” Faisal said.