Petroleum price hike hits urban Indonesians hardest, widens inequality.
The article examines how removing government subsidies on petroleum in Indonesia affects prices, economic growth, and income distribution using a computer model. When subsidies are cut, gas prices and production costs rise, leading to lower consumer demand, production, and income. As a result, consumer purchasing power drops, impacting urban households the most. The study predicts a small price increase, a slight decrease in output, and significant challenges for urban families due to the subsidy reduction in Indonesia.