Noodle prices will rise, predicted Airlangga Hartarto, the Indonesian coordinating minister for economic affairs, at the World Economic Forum’s annual meeting in Davos in late May. He was expressing concern in the context of the global wheat insecurity stemming from the Ukraine crisis.
Airlangga might have had in mind Indomie — a hugely popular instant-noodle brand from Salim Group core member Indofood Sukses Makmur. Instant noodles are a national dish in Indonesia. Indomie, offering a wide range of flavours and affordable prices, has captured the hearts and stomachs of the public.
Indonesian demand for instant noodles reached 13.27 billion servings in 2021, second only to the 43.99 billion servings of mainland China, including Hong Kong, according to the World Instant Noodles Association. Indonesia tops China in consumption per capita, logging about 50 servings a year. Most noodles consumed here are thought to be instant varieties from Indofood, including Indomie packets, and their prices are directly linked to people’s livelihoods.
Food prices are on the rise. Wheat, which is used for Indomie noodles, went for 11,600 rupiah (79 cents at current rates) per kg as of June 8 — up 13% on the year.
Indomie noodles sell for about 2,800 rupiah on average at stores, an affordable price in a country with an average monthly wage equivalent to around US$200.
The retail price reflects the April hike in the value-added tax, but Indofood kept the price of the product itself unchanged. With wheat prices climbing, many consumers and president Joko Widodo’s government alike are closely monitoring Indomie prices.
Indofood is enjoying robust earnings, with group net profit soaring to a 10-year high in 2021. The strength was driven by sales of Indomie, which served as a comfort food for people stuck at home amid coronavirus restrictions.
Asked about a possible price hike, an Indofood official said the company will take raw materials and ingredient prices, the economy, and consumer buying power into consideration.
Pricier Indomie packets would force a change in behaviour, according to an office worker in Jakarta. “Even if the price goes up by just 500 rupiah, when you add them up for a month, it will have a big impact,” he said. “Now I eat Indomie noodles three or four times a week, but I’ll have to change that to once or twice a week.”
Indonesia has been suffering from food headaches. Surging cooking oil prices sparked student protests, spurring the government to place a ban on palm oil exports, only to lift it three weeks later. Unhappy with the blunder, Widodo sacked trade minister Muhammad Lutfi in a cabinet reshuffle announced Wednesday.