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HomeUncategorizedThe price of instant noodles as an index of inflation in Indonesia

The price of instant noodles as an index of inflation in Indonesia


Indonesians only need to look at the price of Indomie – the country’s most popular instant noodle brand – to know what inflation is at.

As the impact of the Russia-Ukraine conflict spreads globally, Indonesians are especially concerned about paying more for food, especially their favorite instant noodles. In Indonesia, the most popular brand of instant noodles is Indofood Sukses Makmur’s Indofood.

Indomie noodles are sold for an average of about 2,800 rupiah ($0.19) in stores. This is affordable in a country where the average monthly salary is around $200.

After the value-added tax increase in April, the price of Indomie instant noodles remained the same. But as wheat prices climb, many consumers as well as the government of President Joko Widodo are keeping a close eye on the price of the product.

Indomie instant noodles sold in indonesia. Photo: nikkei

Indomie instant noodles sold in Indonesia. Photo: Nikkei

Food prices in Indonesia are increasing. Wheat, which is used to make Indomie noodles, cost 11,600 rupiah ($0.79) per kilogram on June 8 – a 13% increase from the same period last year.

At the World Economic Forum (WEF) late last month, Indonesian Economy Minister Airlangga Hartarto predicted an increase in the price of instant noodles. He expressed concern about this, in the context of global wheat insecurity due to the Ukraine crisis.

According to the World Instant Noodles Association, Indonesia’s instant noodle demand will reach 13.27 billion packages in 2021, just behind China. However, Indonesia is ahead of China in terms of per capita consumption, with each person eating about 50 packs per year. Most of the instant noodles in this country are products of Indofood. So their prices are directly related to the people.

Indofood last year recorded the highest net profit in 10 years. Business results were boosted by strong sales during last year’s pandemic, when many people were stuck at home. When asked about the possibility of a price increase, an Indofood official said that the company will consider the prices of raw materials and ingredients, as well as consider the health of the economy and the purchasing power of consumers.

On Nikkei, an office worker in Jakarta said that if the price of instant noodles increases, he will have to change his eating habits. “Even if the price only increases to 500 rupiah (800 dong), the whole month will have a big impact,” the employee said. He currently eats 3-4 packs of noodles a week, but will reduce to 1-2 packs if the price increases.

Indonesia is having a headache with food problems. Rising cooking oil prices sparked student protests, prompting the government to issue a ban on palm oil exports, which was lifted only three weeks later. President Widodo also fired Commerce Minister Muhammad Lutfi in a cabinet reshuffle announced Wednesday (June 16).

Last month, Indonesia’s inflation rose at its fastest pace in nearly five years as limited food and energy supplies in global markets hit domestic consumer prices. The Indonesian Statistics Authority (BPS) said that the country’s consumer price index in May increased by 3.55% year-on-year, higher than April’s 3.47%.

“The increase in prices of strategic commodities in the global market, such as flour and soybeans, significantly contributes to domestic inflation,” said Margo Yuwono, head of Indonesia’s statistics agency.

Session An (according to Nikkei)

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