Indonesia Adjusts Non-Subsidized Fuel Prices to Ease Budget Burden

The Indonesian government's decision to adjust the prices of non-subsidized fuel products, effective April 18, 2026, is a necessary step towards fiscal prudence, according to energy economics observer Fahmy Radhi from Universitas Gadjah Mada (UGM).

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The decision to adjust the prices of non-subsidized fuel is a correct policy to reduce the burden on the state budget for paying compensation because Pertamina has to sell fuel below its economic price.

Radhi explained that the price increases for Pertamax Dex, Dexlite, and Pertamina Dex, while significant, are unlikely to cause a substantial rise in inflation or a sharp decline in purchasing power. This is attributed to the relatively small consumer base for these premium fuels, who are generally considered to be in the upper-income bracket with strong purchasing power.

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Although a bit late, the government has finally raised the prices of non-subsidized fuel which will be effective starting April 18, 2026.

Furthermore, the government's strategic decision to maintain the prices of Pertamax and Green Pertamax, along with the continued subsidy for Pertalite and Solar until the end of 2026, is seen as a move to prevent widespread consumer migration to cheaper options and to avoid ballooning the overall fuel subsidy burden. This guarantee provides much-needed certainty for consumers, although Radhi cautions that relying on a fixed timeframe for such guarantees can be risky, suggesting that global oil prices might be a more stable benchmark for future adjustments.

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The price increase for non-subsidized fuel this time is quite high, but it is estimated that it will not increase inflation and decrease purchasing power significantly.