Inflation and Instant Noodles: How Indonesia and Thailand Are Trying to Keep Lowly Carbs Affordable

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Mr. Ungkool’s shop opened in late 2021, during which the lifting of COVID-19 restrictions was already underway.

Rice is Thailand’s main staple, but instant noodles are a pantry staple for many due to cost.

“They’ve been in Thai society for a long time. He’s a friend at the end of the month,” Ungkool told CNA, referring to a Thai figure of speech, in which, for many, instant noodles could be the only affordable meal. just before payday.

WAR AND WHEAT

The main ingredient of instant noodles is wheat, a commodity that Ukraine produces heaps of. But millions of tons of wheat, as well as other grains like corn and barley, have been stuck in Ukrainian ports because of a Russian blockade.

A recent agreement negotiated by Turkey will allow exports to resume, a measure that many hope will bring down world grain prices and, by extension, food prices.

For Indonesia, the world’s largest wheat importer, it can’t happen soon enough. According to data from the United Nations food agency, the Food and Agriculture Organization of the United Nations, Indonesia imported more than 10 million tonnes of wheat in 2020, a quarter of which came from Ukraine. .

The situation in Thailand is similar. After the United States, Ukraine is Thailand’s second largest source of wheat.

PASS THE COST

Mr. Agus, the vendor of warkop in Jakarta, said the price of instant noodles had risen by more than 20% two months ago. He has no choice but to pass this on to his customers.

He rattled off a list of figures – seemingly small – but not inconsiderable for a clientele like his: “A bowl of instant noodles usually costs around 6,000 rupees (US$0.40). Now it is 10,000 rupees (US$0.66). Add an egg and it’s 13,000 rupees ($0.86).”

Food manufacturers fear a protracted war.

“I’m not too worried about the food stock this year. It’s because the crops were sown last year and harvested this year,” said Mr. Adhi Lukman, chairman of the Indonesian Producers Association. Food and Beverage (GAPMMI).

“But, if this war continues, it will be difficult to sow new crops, and next year will be more dangerous, not only in terms of higher prices, but also the availability of the commodity.”

Adhi told CNA he estimates food prices could rise by 5% next year, putting more pressure on an Indonesian economy that has seen inflation reached 4.35% in Junethe highest since 2017.

FINANCE MANAGEMENT

Thailand is also feeling the pinch. Its latest headline inflation rate beat forecasts, coming in at 7.66%, the highest in 14 years. Food prices alone increased by 6.42% over the previous year.

Makers of Thailand’s top-selling instant noodle brands have repeatedly warned that due to rising production costs, they may have to raise the price of the beloved pantry item to 7 baht ( $0.19) per packet, the first increase in 15 years.

CNA contacted some of the major Thai manufacturers for comment. All refused to be questioned about it.

But the government takes a different view. She rejected the manufacturers’ proposal to raise prices and listed instant noodles as an “essential item”. This effectively freezes its price to protect people from rising costs.

Other items on this list include necessities such as cooking oil, eggs, pork, as well as building materials and agricultural products such as cement and fertilizers.

Chakra Yodmani, deputy director general of the internal trade department of the Thai Ministry of Commerce, expressed some understanding for the companies and their shrinking profit margins, but also added that, like everyone else, they have to manage their finances.

“We are asking manufacturers to cooperate, so they may have to compensate with revenue from products that are still selling well in order to continue operating,” Chakra said.

Back at the instant noodle shop, Mr Ungkool doesn’t expect prices to stay the same for the foreseeable future.

“We haven’t increased our prices for foreign noodles yet, but I expect our suppliers (for domestic brands) to let us know about the changes soon,” he said. “6 or 7 baht per pack might not be enough for them.”

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