Vietnam raises fuel prices, Indonesia delays cutting fuel subsidy

As international crude prices hit 2 ½ year highs, Vietnam responded with a rise in fuel prices while Indonesia decided to delay removing fuel subsidies. Vietnam is currently dealing with double-digit inflation, partly due to rising energy prices. Finance Minister Vu Van Ninh said in a recent interview that the fuel price hike plus a record increase in electricity prices could add two percentage points to the country’s full year inflation. According to Vietnam’s government, the country reached a two-year high of 12.31% in February, causing retail prices of petroleum products such as diesel fuel and gasoline to reach highs, seconded only by Singapore and China. The Finance Ministry increased the price of diesel fuel by 24.1% per liter, 92-octane gasoline by 17.7%, fuel oil by 16.6% and kerosene prices by 20.5%. The Finance Ministry has asked petrol distributors not to use the petrol price stabilization fund which they have used in the past to make up for losses. Meanwhile, Indonesia is trying a different approach to curb inflation by putting off a plan to limit the use of cheap subsidized fuels. Hartadi A Sarwono, deputy governor, said that the plan will let the rupiah currency strengthen to curb imported inflation. “We are concerned over imported inflation from both oil and food prices. We keep monitoring rising oil prices,” said Sarwono. (February 25, 2011)