ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Food & Beverage

In Indonesia, all eyes on Indomie noodles as inflation benchmark

Wheat supply disruption threatens affordability of a national dish

Indomie instant-noodle packets tempt shoppers from the shelf at a supermarket in Jakarta. (Photo by Koya Jibiki)

JAKARTA -- As the shock waves from the Ukraine war ripple across the globe, people in Indonesia are particularly concerned about paying more to put food on the table, especially their favorite instant noodles.

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 flavors 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 kilogram 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 $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, especially lately. Group net profit peaked in 2021 relative to the past decade of results. 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 behavior, 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.

Additional reporting by Bobby Nugroho and Ismi Damayanti.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more