The Ukraine crisis worsens every minute and could disrupt domestic price stability in the ASEAN countries such as Indonesia.
Ukraine Crisis Can Affect Domestic Price Stability in ASEAN Countries
Indonesian President Joko Widodo notified his citizens of the disruption in domestic price stability due to the Ukraine crisis. He also pressed how long the government could maintain local fuel prices stable despite soaring global oil prices. So far, the inflation rate in SEA’s largest economy has remained favorable. However, Jokowi said that the government had put a cap on fuel prices to regulate inflation.
“Oil prices … have risen twofold (since 2020). All countries have raised retail prices, but we are here still holding them. I’ve asked my (finance) minister, how long can we hold this amid the energy shortage? We must manage the economy carefully at the moment,” said President Jokowi during a university event in Central Java.
The government ordered PT Pertamina not to introduce a price hike for its low-quality fuels. PT Pertamina is Indonesia’s largest fuel distributor. It also offers octane fuels that are below its competitor’s prices.
The government and Bank Indonesia would minimize risks that can add to Indonesia’s inflation rate. They aim to regulate unpredictable food inflation within a 3%-5% range. According to the bank, authorities would make certain that there’s adequate supply and foodstuff distribution before the religious festivities. Food prices become high as Ramadan approaches, a Muslim fasting month that will start in early April.
Local media reports of ascending prices of tofu and soy-based tempeh. It also includes sugar and beef. Palm oil export has been controlled to keep domestic price stability. The local cooking oil prices climbed 40% earlier this year.
Indonesia’s Palm Oil Exports Declined
In January, Indonesia’s palm oil exports were 2.18 tons. It dropped 23.8% from the same month in 2021. According to the Indonesian Palm Oil Association (GAPKI), it includes refined products such as oleochemical. The decline in January shipment was because of lower production. China and Pakistan’s monthly purchases had been reduced.
The country’s January production reached 3.86 million tons of crude palm oil and around 0.37 million tons of palm kernel oil. It is down from December’s production of 3.98 million tons of crude palm oil. January’s ending stock established 4.68 million tons, which is an increase of .55 million tons a month earlier.
During the year’s first half, there’s already an expected supply gap in worldwide edible oil. Russia’s invasion of Ukraine affted the supply of palm oil. Ukraine is one of the leading sunflower and rapeseed producer. The disorder in alternative oil supplies, such as sunflower and soybean oil has stimulated a recovery on palm oil from Indonesia.
To control cooking oil prices at home, and domestic price stability, Indonesia stipulated export restrictions in January. It resulted in high global palm oil prices.
Major industry analysts said rigid edible oil stockpiles including blocked shipments from the Black Sea keep prices near record highs for the months to come. They said that the rise in palm oil prices led to the increase in demand for solid fat which is way too cheaper than liquid oils.
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