Government to increase unhusked rice prices

The government will raise the basic price of unhusked rice around the same time as it increases the price of oil-based fuels in order help farmers cope with the effects of the fuel price hike.

Minister of Agriculture Anton Apriyantono said the government would increase the price to Rp 1,530 (15 U.S. cents) per kilogram from the current Rp 1,330, probably next month.

"The higher price of unhusked rice is expected to help farmers cope with the impact of the fuel price increases," he said after meeting President Susilo Bambang Yudhoyono on Tuesday.

Anton said the government was not concerned about the impact of the rise on inflation as fluctuations in the price of rice had little impact on the overall inflation figure.

Minister of Trade Mari E. Pangestu said last week that food prices would probably increase by more than 10 percent after the government increased fuel prices early next month, and transportation and production costs would also increase dramatically.

She added that the figure was a preliminary estimate based on the effects of the average 29 percent increase in fuel prices in March, which drove food prices up by between 5 percent and 10 percent.

The central bank has said that with the upcoming fuel price increases, the country's inflation rate will be above 9 percent this year.

However, analysts estimate that with increased rice prices, inflation level could rise above 10 percent for the full year as rice is the country's staple food. -- JP