Syahnur, S: Impact of Price Changes on the Poor in Nanggroe

The phenomenon of oil prices increase due to oil subsidy reduction is a crucial and dilemmatic issue for developing countries such as Indonesia. This is because the magnitude of the resulting effects of rising oil prices is not merely related to the shrinkage of the government expenditure burden in the future, but also triggers off a set of negative consequences on all aspects of economic sectors. Moreover, it also directly or indirectly engenders a tricky situation on socio-economic households in term of welfarereducing both in rural and urban regions. Most of the theoretical viewpoints are tightly highlighted that an increase in oil prices will induce elevated living cost for certain household groups in the society (the living standards of both poor and vulnerable household groups mostly at middle income households fall down). It implies that the impact of oil prices increase will concurrently push the inflation rate to a higher and higher level (spiral inflation), the purchasing power of households as indicated by the rate of households¿ real income worsens in the near future below a certain threshold (poverty line). At long last those with little income will be trapped into the poverty circle (vicious circle of oil prices increase). The households are openly vulnerable to be trapped into poverty and the poor who are already in the poverty trap will be the poorest (chronic poverty). There is an unambiguous relationship between oil prices increase as one of the urgent government policies and the households¿ real income decline. This study attempts to investigate the impact of oil prices increase on the poor at regional level in particular in Nanggroe Aceh Darussalam (NAD) province. To get an in-depth understanding of this issue, the study utilizes three approaches to capture the micro and macro impact of oil prices increase on the poor: the Descriptive Analysis Approach (DAA) supported by the primary data from field research, the Social Accounting Matrix (SAM)