Sampoerna up cigarette prices

Bloomberg, Jakarta

PT HM Sampoerna, Indonesia's second-largest cigarette maker, said it increased wholesale prices on all its brands, the second rise in two months.

The price of its Dji Sam Soe hand-rolled clove cigarettes went up 4.3 percent to Rp 5,490 (61 U.S. cents) for a pack of 12, the tobacco company said in an e-mailed statement. Sampoerna also raised the price it charges distributors for nine other products by an average rate 3.4 percent.

Indonesia's government increased fuel prices, telephone and electricity tariffs in January as it reduced subsidies to cut a budget deficit it expects will reach 34.4 trillion rupiah.

"With the price increase for other utilities, the cigarette price increase will exert further pressure on already soft consumer demand," said Heriyanto Irawan, head of research at Merrill Lynch & Co. in Jakarta. "The sales volume will contract this year for the entire cigarette industry."

The government raised the minimum price for cigarettes by between Rp 40 and Rp 75 a cigarette and increased the excise tax on hand-rolled cigarettes last November to help narrow its budget deficit, estimated at Rp 40.5 trillion last year and Rp 34.4 trillion this year.