The Indonesian government on Wednesday reduced subsidized-fuel prices as the global prices of the commodity decrease.
The reduction was conducted on two types of fuels, a low-grade RON88 fuel, locally known as premium fuel and diesel fuel, Indonesian Energy and Mineral Resources Minister Sudirman Said said at the State Palace.
Premium fuel price was cut from 6,950 rupiah (some 0.520 U.S. dollar) per litter to 6,450 (about 0.484 U.S. dollar) per litter, and diesel fuel price was reduced from 5,650 rupiah (equal to 0. 423 U.S. dollar) per litter to 5,150 rupiah (some 0.386 U.S. dollar) per litter, he said.
Minister Said disclosed that the decision was made after considering the ongoing uptrend of global oil prices.
"Therefore, we maintain those new prices to be able to sustain for the next three or six months," he said.
The minister added that the new price is to be effective on April 1. The prices cut will be followed by the reduction of transport cost by about 3 percent, Transport Minister Ignasius Jonan said.
"I have sent instruction letters to the authorities to reduce transport cost," he said.
The oil prices cut is expected to boost people's purchasing power in Indonesia, in which consumption is the most fundamental factor which contributes to the GDP growth.
Indonesia's inflation has been in check in recent months and the economy picked up to 5.04 percent in the fourth quarter from revised 4.74 percent in the previous quarter.
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