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Indonesia's increase in non-subsidized fuel prices raises concerns about tighter supplies and increased pressure on state budgets, as more households may shift to subsidized fuels.

Non-Subsidized Fuel Price Increase and Its Ripple Effect

Indonesia's state energy company, Pertamina, has increased the prices of some non-subsidized fuel products. Economists warn that this move could push more households towards subsidized fuel grades, raising the risk of tighter supplies and adding pressure on a state budget already trying to contain politically sensitive energy costs. This underscores the government's balancing act: allowing market-priced fuels to rise with global crude costs while shielding subsidized products used by lower-income households.

Government's Energy Policy Dilemma

This price hike highlights the energy policy dilemma faced by the Indonesian government. It must adjust market prices in response to fluctuating global crude costs while maintaining subsidy policies that directly impact the stability of ordinary people's lives. The rise in non-subsidized fuel prices could increase the reliance of lower-income households on subsidized fuels, potentially leading to higher subsidy expenditures and placing a burden on government finances.

*Source: SCMP (2026-04-22)*

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