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By Stanley Widianto and Gayatri Suroyo

JAKARTA, Sept 3 (Reuters) - Indonesia raised subsidised fuel prices by about 30% on Saturday, as the government moves to rein in ballooning subsidies despite a risk of mass protests.

The price of subsidised gasoline was raised to 10,000 rupiah ($67 U.S. cents) a litre from 7,650 rupiah, while that of subsidised diesel rose to 6,800 rupiah a litre from 5,150 rupiah, energy minister Arifin Tasrif said.

"I actually wanted domestic fuel prices to remain affordable by providing subsidies, but the budget for subsidies has tripled and will continue to increase," President Joko Widodo told a news conference.

"Now the government has to make a decision in a difficult situation. This is the government's last option," said Jokowi, as the president is known.

Southeast Asia's largest economy had already jacked up its 2022 energy subsidies to 502 trillion rupiah ($34 billion), triple the original budget, pushed by rising global prices of oil and a depreciating rupiah currency.

If prices were not raised, the budget would have ballooned to 698 trillion rupiah, said Finance Minister Sri Mulyani Indrawati.

She estimated total energy subsidies would range between 591 trillion and 649 trillion rupiah for this year following the price hike, assuming the average crude price stays between $85 and $100 a barrel the rest of the year.

High energy subsidies had restrained Indonesia's inflation, at 4.69% in August, allowing the central bank to delay raising interest rates until last month, well behind regional and global peers.

Hariyadi Sukamdani, head of the Indonesian Employers Association, said price pressure from the fuel price hike would not be too much, predicting inflation will top 6% at the end of the year.

"If prices of goods are too expensive, people won't buy. We can't raise prices too much," he said.

Businesses are using unsubsidised fuels, but the price hike will affect logistics costs, Hariyadi said.

Still, accelerating inflation could put pressure on Bank Indonesia (BI) to tighten monetary policy more quickly. The bank holds a two-day policy meeting ending on Sept. 22.

Bank Mandiri economist Faisal Rachman estimated inflation could accelerate to between 6% and 7% and BI could raise the policy rate to 4.25% this year from 3.75% now.

Faisal forecasts 5% economic growth this year despite the fuel price increase, supported by commodity exports and post-pandemic mobility, adding that the government's cash distribution could help cushion some of the impact on consumption. The economy grew 5.44% in the April-June quarter.