Pertamax Price Hike to Drive Users to Pertalite, Strain Subsidies

Indonesia's decision to raise the price of Pertamax, a non-subsidized fuel, is poised to shift consumer behavior towards the cheaper, subsidized Pertalite, according to economic analysts. This price adjustment, increasing Pertamax from Rp12,300 to Rp16,250 per liter, is projected to widen the gap between subsidized and non-subsidized fuels, creating significant economic implications.

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When the margin of increase is too far, the options are to pay more, or go down to Pertalite.

The Center of Economic and Law Studies (CELIOS) estimates that the roughly 32% price hike for Pertamax will inevitably push many consumers to switch to Pertalite. Media Wahyudi Askar, Director of Public Policy at CELIOS, stated that the substantial price difference leaves consumers with limited choices: pay more for Pertamax or opt for Pertalite, thereby increasing the number of subsidized fuel users. This migration, he warned, could place additional pressure on the government's energy subsidy budget.

CELIOS also challenges the notion that Pertamax price increases only affect the wealthy. Askar argued that Pertamax users come from diverse economic backgrounds, including workers, teachers, and online motorcycle taxi drivers, many of whom are part of the aspiring middle class. The economic think tank cautions that the impact extends beyond fuel consumption patterns, potentially squeezing the purchasing power of the middle and lower-middle classes, increasing poverty risks, driving up food prices, and accelerating credit interest rate transmissions.

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The view that the increase in Pertamax 92 only hits the rich is a mistaken simplification.

Adding to the concern, Nailul Huda, Director of Economics at CELIOS, pointed out that the government's decision to keep subsidized fuel prices stable while increasing Pertamax prices directly contributes to the increased demand for Pertalite. This, he explained, will likely lead to an increase in the Pertalite quota and a subsequent swelling of overall fuel subsidies. The effectiveness of current measures, like the QR code system for limiting purchases, is also questioned, with concerns that off-station sales of Pertalite could undermine consumption control efforts.

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When the government decides to raise the price of Pertamax 92 without raising the price of Pertalite, there are consequences of increased demand for Pertalite.