Global Oil Prices Surge, Economist: Purchasing Power Under Pressure and Economic Growth Slows

Jakarta, Kompas.com - The surge in global oil prices not only affects the price of fuel but also has the potential to dampen Indonesia’s economic growth through higher living costs and production costs across various sectors. Economist and Public Policy Specialist at UPN Veteran Jakarta Achmad Nur Hidayat believes that rises in global energy prices can trigger a domino effect that spills from the energy sector into all domestic economic activities. ‘Oil is not just a commodity, but a button that can ignite inflation, drain the national budget (APBN), and slow the growth engine,’ Achmad said on Sunday (8 March 2026). He explains that when global oil prices rise, the impact does not stop at energy prices alone. That sequence of events, according to Achmad, can ultimately trigger higher inflation and directly affect the purchasing power of the people. According to Achmad, the first channel that is most noticeable is a decline in household purchasing power. Energy is a crucial component in transport and logistics, so increases in energy prices quickly push up the prices of goods, especially products that rely on distribution. As a result, real household income falls as expenditure on daily necessities increases. In fact, household consumption has been the main engine of Indonesia’s economic growth. Pressure on purchasing power, although seemingly small, can have a large impact on the pace of national economic growth. Moreover, the surge in energy prices also triggers higher production costs across various industrial sectors. Manufacturing, transportation, modern agriculture, and logistics services must bear higher operating costs when energy prices rise. In such a condition, companies typically face three options: raise product prices, tighten profit margins, or delay business expansion. However, in the face of global uncertainty, the option often taken is to delay investment.