Entering the year-end, the prices of several basic commodities have showed a significant increase. An increase in global commodity prices and La Niña have driven soaring domestic prices.
By
KOMPAS TEAM
·5 minutes read
Kompas/Wawan H Prabowo
A number of buyers choose fresh vegetables at the Kebayoran Lama Market, Jakarta, Sunday (26/12/2021). Five days before the turn of 2021 to 2022, a number of prices for vegetables and other basic needs have increased.
JAKARTA, KOMPAS — The prices of a number of basic commodities such as cooking oil and red chilies increased sharply over the Christmas holiday. An increase in global commodity prices and the La Niña weather phenomenon has contributed to the increase in food prices. The price hike will in turn drive inflation, which could further affect consumers’ buying power, which generally remains weak.
The Trade Ministry reported that the prices of a number of basic commodities such as cooking oil, red chilies, chicken eggs, and shallots had showed a significant increase on a monthly basis. As of 24 Dec. 2021, the price of bulk cooking oil increased 3.49 month-to-month (mtm) to average Rp 17,800 (US$1.25) per liter, surpassing the retail price ceiling (HET) of Rp 11,000 per liter.
The price of packaged cooking oils of standard quality also increased 4.55 percent to average Rp 18,400 per liter. Likewise, the price of high-quality packaged cooking oils increased 5.26 percent to average Rp 20,000 per liter.
Meanwhile, the price of red chilies increased 118.94 percent to average Rp 94,800 per kilogram, large red chilies increased 23.5 percent to average Rp 49,400 per kg, and curly red chilies increased 26.04 percent to average Rp 51,300 per kg. The price of chicken eggs also increased 11.72 percent to average Rp 28,600 per kg, while the price of shallots increased to 8.43 percent to average Rp 28,300 per kg.
In previous years, the government was able to control the prices of basic foods such as cooking oil. For comparison, in the fourth week of December 2020, the prices of bulk and packaged cooking oils respectively averaged Rp 12,100 per liter and Rp 14,838 per liter, far below the current prices.
The prices of red chilies also showed a similar trend. As a comparison, entering the fourth week of December 2020, red chili prices averaged Rp 57,500 per kg, far below the current prices.
KOMPAS/DIONISIUS REYNALDO TRIWIBOWO
One of the chili traders in Palangkaraya Big Market, Central Kalimantan regulates his wares, on Sunday (26/122021).
According to Kompas’ observation on Sunday (12/26/2021) at Pasar Besar market in Palangkaraya, East Kalimantan, the prices of red and green chilies soared to average Rp 130,000 per kg. Suharni (30), a vegetable and spice trader at the market, said that the price of red chilies had increased since last week. In fact, the normal price of chilies was around Rp 80,000 per kg.
At Cihapit Market in Bandung, West Java, chili prices increased to an average Rp 120,000 per kg from between Rp 40,000 and Rp 50,000 per kg three weeks ago.
A number of buyers complained about the increase in the prices of basic commodities. However, the trader could do nothing.
"Traders buy at high prices. If the commodities were sold at the normal price [before Christmas], the traders would make losses,” said Jejen (42), a trader at Cihapit Market.
Efforts to control price hike
The Trade Ministry’s domestic trade director general, Oke Nurwan, explained that the increase in the domestic prices of cooking oil was caused by an increase in the global price of crude palm oil (CPO). CPO prices at Dumai Auction Market reached Rp 12,041 per liter in the fourth week of December, a 42.28 percent mtm increase from that in December 2020.
"We estimated that world CPO prices will decline slightly in early January 2022, so the price of cooking oil in mid-January 2022 is expected to fall in the range of Rp 16,000 per liter," said Oke.
According to Oke, to deal with the hike in cooking oil prices, the government had distributed 11 million liters of standard-quality packaged cooking oils to 45,000 modern retail markets at a price of Rp 14,000 per liter. In addition, the government would also conduct market operations by direct sales of cooking oils at subsidized prices to curb inflation. The subsidy is partly financed using the CPO export tax revenues of the Indonesian Oil Palm Estate Fund (BPDPKS)
Kompas/Wawan H Prabowo
Traders serve chili buyers at Kebayoran Lama Market, Jakarta, Sunday (12/26/021). Five days before the turn of 2021 to 2022, a number of prices for vegetables and other basic needs have increased.
For chilies, the price increase occurred because harvest season started to end in several production centers in East Java amid a surge in demand, especially in a number of areas in Sumatra. In addition, the productivity of chili plants has decreased due to the effects of La Niña, which is forecast to peak in January 2022.
"To overcome this, we will distribute chilies from areas with abundant supplies to areas with a shortage of supply," said Oke.
The high prices of a number of basic commodities can affect the inflation rate. For example, according to Statistics Indonesia (BPS), the increase in the prices of standard-quality and high-quality cooking oil respectively contributed 0.05 percent and 0.08 percent to monthly inflation in the food and beverage category in October and November 2021.
Based on a price monitoring survey in the fourth week, Bank Indonesia (BI) estimated that the increase in the prices of chilies and cooking oils would contribute respectively 0.13 percent and 0.07 percent to monthly inflation in December.
To overcome this, we will distribute chilies from areas with abundant supplies to areas with a shortage of supply.
Research director Berly Marta Wardaya from the Institute for Development of Economics and Finance (Indef) said a number of factors, such as the increase in global commodities prices, supply chain disruptions and climate change would continue to push up inflation next year. Indef estimated that Indonesia's inflation in 2022 would rise to 3.4 percent.
“Inflation will also be driven by the increase in energy prices, which will result in increased production costs and selling prices of a number of products and services. Therefore, the government urgently needs to anticipate this while continuing to further help restore the people’s buying power," he said. (HEN/ERK/IDO/TAM )
This article was translated by Hendarsyah Tarmizi.
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