Online food prices drop in Indonesia as competition between Gojek and Grab hots up

Gojek and Grab are giving discounts of as much as 50 per cent and more on purchases made online or with e-wallets

This price war is not only making food more affordable, it’s also keeping a lid on inflation and allowing the central bank to cut interest rates

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A Grab driver makes a delivery in Jakarta, Indonesia. Photo: Bloomberg

Published: 2:57pm, 1 Nov 2019Updated: 2:57pm, 1 Nov 2019

Indonesia’s national dish of nasi goreng, or fried rice, has become a lot cheaper these days as the nation’s two big ride-hailing apps wage a price war on every day groceries.

In a battle for market share in Southeast Asia’s biggest economy, Gojek and Grab are giving discounts of as much as 50 per cent and more on purchases made online or with e-wallets. Not only is the competition making food more affordable, it’s also keeping a lid on inflation and allowing the central bank to cut interest rates.

Some of the key ingredients in nasi goreng – rice, onions, eggs and chilli – could be bought this week from The FoodHall supermarket via the Grab app for 144,600 rupiah (US$10.30). Those goods cost 156,186 rupiah if bought directly from the same store in central Jakarta.

“It’s difficult to assess the direct effect online purchases are having on price growth in the economy, but it’s certainly helping to “dampen inflationary pressures,” said Enrico Tanuwidjaja, head of economics and research for PT UOB Indonesia in Jakarta.

Gojek driver helmets are seen in Jakarta, Indonesia. Photo: Reuters

Inflation eased to 3.1 per cent in October from a year ago, the slowest pace in six months, staying well within the central bank’s target band of 2.5-4.5 per cent. Growth in food prices, which make up about 19 per cent of the consumer price index, eased to 4.8 per cent in October from 5.4 per cent in September.

Low inflation has allowed Bank Indonesia to cut interest rates four times this year to help support the economy amid a global slowdown. The bank is set to lower its inflation target band to 2 to 4 per cent in 2020 as price pressures remain subdued.