Government must prepare fundamental stimulus to ease fuel price pressures

Jakarta (ANTARA) - The Head of the Macroeconomics and Finance Centre at the Institute for Development of Economics and Finance (INDEF), M Rizal Taufikurahman, believes the government needs to prepare fundamental stimulus to ease the pressure from rising non-subsidised fuel oil (BBM) prices. “A combination of short-term stimulus and job creation will be key to maintaining purchasing power while supporting economic growth amid the pressure of rising non-subsidised fuel prices,” he said when contacted by ANTARA in Jakarta on Friday. On a more fundamental level, the government needs to accelerate state and regional spending that has a high multiplier effect, encourage investment, and support micro, small, and medium enterprises (UMKM) and labour-intensive industries. With more than 97 percent of Indonesia’s workforce employed in the UMKM sector, Rizal said maintaining liquidity and activity in this sector would be more effective in preserving people’s incomes than merely providing consumptive aid. The increase in non-subsidised fuel prices has the potential to suppress purchasing power, especially among the middle class, which has been the engine of domestic consumption. “Indonesia’s inflation in May 2026 was around 3.08 percent year-on-year, and the BI-Rate has already risen to 5.50 percent, so the space for public consumption is increasingly squeezed by rising living costs and credit costs,” he explained. Rizal cited strengthening social assistance for vulnerable groups and extending incentives for labour-intensive sectors as examples of the stimulus that should be rolled out. “This step is more effective than expanding energy subsidies, considering that around 20 percent of the highest-income household groups still enjoy a relatively large portion of energy subsidies, so poorly targeted subsidies actually reduce fiscal efficiency,” he said. As a note, starting 10 June 2026, the price of non-subsidised Pertamax (RON 92) fuel rose from Rp12,300 to Rp16,250 per litre, and Pertamax Green 95 (RON 95) increased from Rp12,900 to Rp17,000 per litre. Meanwhile, the subsidised fuel Pertalite remains priced at Rp10,000 per litre and Biosolar at Rp6,800 per litre.