Cracking up: Indonesia’s fish cracker prices to double as inflation bites

The deep-fried crackers served usually alongside every Indonesian meal are set to cost twice as much starting next month, in the latest sign of how inflation is creeping into Southeast Asia’s biggest economy.

“Kerupuk,” named for the crunching sound made when one bites into the prawn or fish crackers, will see prices raised to 2,000 rupiah (US$0.14) apiece starting on May 6 from 1,000 rupiah currently, Detik news website reported, citing the Jakarta Cracker Entrepreneurs Association. The group said production costs have doubled due to higher prices of cooking oil and spices.

“While the price level of kerupuk itself is not going to rock Indonesia’s headline inflation print in and of its own,” Oversea-Chinese Banking Corporation’s economist Wellian Wiranto said, “it is emblematic of the risk that the inflation expectations of ordinary folks going about their ordinary daily lives eating their ordinary food items may get jolted because of extraordinary price increases.”

The inflation pain is set to worsen as the government raises prices of premium fuel by 40 per cent this month, with possible hikes for more widely-used petrol, diesel and household LPG to follow.

There is growing risk that inflation expectations could get unmoored and push up the core reading, which Bank Indonesia is monitoring to decide on a possible rate hike, Wiranto said.

While the central bank is expected to hold rates at its meeting Tuesday afternoon, he expects tightening could start as soon as May, earlier than the market consensus for an adjustment in the second half of the year.