Indonesia's middle class hard hit by rising fuel costs

Before Indonesia effectively shut down for the Eid ul-Fitr earlier this month, Ibu Tarmi sold a kilogram of potatoes for about 6,000 rupiah. Now that price has almost doubled to help absorb the cost of vegetables she buys from delivery trucks every morning at about 5am.

What's more, the 57-year-old Tarmi, who only uses one name, doesn't feel she can pass on to her customers the full cost of the price hike that resulted from the government's decision in June to raise the subsidized price of fuel by 44 per cent.

Normally her prices have a built-in 4,000 rupiah profit margin. Now it's more like 1,000 rupiah. "It doesn't feel good. People complain the price has changed," says Tarmi, who works most days since she and her husband bought the store in 1978 in the Blok A market complex in the centre of the capital.

"I tell them I have also have to pay a different price than before."

Once the driving force of Southeast Asia's fastest growing economy, it's low and middle-class consumers like Tarmi who now seem likely to bear the brunt of the sudden shift in market attitudes that are, in part, bidding down the value of the rupiah to levels unseen in almost four years.

The rupiah slipped to almost 10,800 to the US dollar yesterday - the lowest since April 2009 - helping push up the cost of imported goods, too.