POWER RATE HIKE TO TRIGGER INFLATION : OBSERVER

Padang, W Sumatra, March 10 (ANTARA) - The government's plan to raise the basic power rate (TDL) will boost inflation and reduce the competitive edge of domestic products, an observer said.

"An increase in power tariff rates will raise production cost and boost inflation in terms of supplies," Dean of the Economic Faculty of Padang State University (UNP), Prof Syamsul Amar said here on Wednesday.

He said that now the average national inflation had reached 14 percent per annum and in certain cities the inflation had been recorded over 14 percent.

Syamsul said that if the government raised the electricity tariff it would reduce the real income of the people. In the end, demand would go down and if this happened it would discourage the real sector.

He said that inflation would boost commodity price increases in the market. If commodity prices increase it will reduce people's purchasing power and the real sector would be affected.

In terms of the competitive edge of domestic products, increase in the power rate would raise production cost, thus causing industries to face high production costs, he said.