Food Prices to Increase by 10 Percent Next Year
14 October 2015 15:56 WIB
TEMPO.CO, Jakarta - Adhi S. Lukman, Chairman of the Indonesian Food and Beverage Association (GAPMMI), estimated that the prices of food and beverage products will increase by five to ten percent next year becaus of the Rupiah depreciation. "Five to ten percent increase is already maximum. More than that, sales will drop," said Adhi on Wednesday, October 14, 2015.
Adhi said that each company has prepared a business simulation to anticipate further drop of the Rupiah exchange rate. Adhi added that the Indonesian food and beverage industry might still be able to operate even if the Rupiah reaches Rp. 15,000 per US dollar.
Continuous depreciation of the Rupiah will burden food and beverage industry because most of the raw materials used in the industry are imported. Adhi said that with the current situation, food prices should have been increased. However, Adhi admitted that it would be hard to increase prices because the people's purchasing power is still weak. "Like it or not, companies must be able to reduce their margin," said Adhi.
Adhi explained that he had met with President Joko Widodo on Tuesday, to explain the situation. Adhi said that he had also asked for the government's support to ensure smooth distribution of raw materials. Adhi also explained that if the government wishes to reduce import, the capability of domestic industry to replace the imported materials or goods must be evaluated.
Based on the Industry Ministry record, the growth of food and beverage industry in the first and second quarter of 2015 was at eight percent. In 2014, the industry contributed Rp 560.62 trillion to the GDP, which equals to 29.95 percent of the non-oil and gas industry's GDP.
PINGIT ARIA