Inflation will rise in wake of fare hikes: Economist
Inflation will rise in wake of fare hikes: Economist
JAKARTA (JP): This week's transportation fair hikes will
probably have contiguous effects on other sectors and send
April's month-on-month inflation rate to over 2 percent, an
economist has warned.
Christianto Wibisono, chairman of the Indonesian Business Data
Center, forecasted that the fare hikes will have psychological
effects in other sectors, especially those directly or indirectly
influenced by transportation.
"Its psychological effects will spread everywhere very quickly
just like a chemical reaction," Christianto said here Thursday.
He explained that the fare hikes, ranging from 9.2 percent to
66.7 percent, could see prices of goods rise by an average of
five percent.
With transportation constituting 20 percent of a company's
costs, a 30 percent increase in transportation fares will
increase the company's costs by six percent.
"In this case, the company will raise the prices of their
goods by more than six percent to compensate for the increasing
cost," Christianto said.
Such contagious effects will contribute to a rise in
inflation, especially for this month. Christianto predicted that
this month will see a month-on-month inflation rate of over 2
percent.
Indonesia's consumer price index dropped by 0.61 percent last
month after increasing by 1.7 percent in February and 2.16
percent in January.
Sharing Christianto's view were Heijrahman and Anggito
Abimanyu, both economists at Yogyakarta-based Gadjah Mada
University. They said that an increase in this month's inflation
rate is inevitable.
"The impact of the fare hikes will be very extensive,
considering that all public goods have direct relations with
transportation, especially land and sea transportation,"
Heijrahman, chairman of the university's Economic Research
Center, was quoted by Antara as saying.
Meanwhile, Achmadi, chairman of the House of Representatives'
public works and transportation commission, suggested that the
fare hikes should be followed by better management of and better
services by transportation firms.
He called on public transportation companies to abolish their
target system, under which they set a revenue target for drivers,
to improve their service and passengers' safety.
Concurring with Achmadi's suggestion, Christianto said that
such a target system is responsible for the further deterioration
of public transportation conditions in big cities.
"I suspect that with such high fare hikes, public
transportation firms will follow them up by raising the revenue
targets for their drivers," Christianto said. "Thus, drivers will
never think of providing a better service or better safety for
their passengers as they will just chase the targets." (icn/rid)