Food prices hit a record high

The price of chilli padi, the fiery-hot bird’s eye chilli, and other basic food items have shot up this month, getting many Indonesians hot under the collar. 

Chilli padi, known in Indonesia as cabai rawit, costs as much as 100,000 rupiah (Bt300) per kilogram in some markets, having doubled in price over the past month. That amount could buy a kilo of beef, the price for which has already jumped by at least 25 per cent during this period. 

The inflation in food prices, common during Ramadan, has always been a serious concern for authorities. However, this year the record spike in prices threatens to stoke dissatisfaction with the government ahead of elections next year.

Bank Indonesia said last week that it expects inflation to hit 7.2-7.8 per cent this year. Several factors were blamed for the recent price spikes, including an increase in the price of subsidised fuel in June and crop failures due to the extreme weather. 

Another factor was the restrictions on amounts of certain food items imported – a move to protect local produce and drive self-sufficiency. The restriction on beef imports was only relaxed recently to help bring the prices down. Bureaucrats now find themselves under greater pressure to boost supply and ease prices ahead of Hari Raya on August 8.

On July 13, President Susilo Bambang Yudhoyono chided agriculture and trade ministers, as well as the chief of the national logistics agency (Bulog), for not doing enough to fix the situation. 

“I can’t be patient, just like the people can’t,” he said. “Have you seen the markets, heard what’s on social media? Let me remind you, our leaders should have a sense of crisis, a sense of urgency, a sense of responsibility.”

University of Indonesia economics lecturer Muslimin Anwar told The Straits Times that the delay in getting import permits from the Trade Ministry was to blame.

“Bulog had proposed this increase [in permits] three months ago, but they were issued just before Ramadan,” he said, adding that prices should moderate after Hari Raya.

Several officials had anticipated the seasonal spike in demand, and had applied to import some 3,000 tonnes of beef from Australia. Bulog, which had hoped to bring in 800 tonnes of beef, was able to only get 8 tonnes last Wednesday.

The agency was set up in 1967 to control the prices of staples during the Suharto era, which ended in 1998. Its purview was confined to rice as part of reforms prompted by the 1997-98 Asian financial crisis. In recent years, its duties have expanded again amid crop and food price uncertainty.

State-owned Enterprises Minister Dahlan Iskan, who oversees Bulog, authorised it to charter an aircraft to bring in the beef on schedule given the dire situation.

“There’s no more time,” he told reporters, noting that Bulog might make a loss but that losing money was far better than letting prices continue to rise.