Annual Cooking Oil Inflation Reaches 10.97 Percent in February 2025

JAKARTA, KOMPAS – Indonesia experienced deflation both on a monthly and annual basis in February 2025. However, there is one commodity whose annual inflation rate reached 10.97 percent, namely cooking oil.

The Central Statistics Agency (BPS), Monday (3/3/2024), released Indonesia's monthly and annual deflation rates for February 2025, which stood at 0.48 percent and 0.09 percent, respectively. Commodities that significantly contributed to the deflation included electricity tariffs, rice, broiler chicken meat, shallots, tomatoes, and red chilies.

The Head of BPS, Amalia Adininggar Widyasanti, stated that electricity tariffs were the most dominant commodity contributing to the deflation. In February 2025, electricity tariffs experienced a monthly deflation of 21.03 percent and an annual deflation of 46.45 percent.

One of the commodities whose price is regulated by the government contributed to a deflation of 0.67 percent on a monthly basis and 2.16 percent on an annual basis. This occurred because the government provided a 50 percent electricity tariff discount in January-February 2025.

"Thus, the main factor behind the deflation in February 2025 is not a decline in public purchasing power but rather discounts on electricity tariffs. This deflation is also supported by a decrease in the prices of several food commodities, such as rice, broiler chicken, shallots, red chilies, and tomatoes," he said.

The main factor of deflation in February 2025 is not a decrease in people's purchasing power but rather electricity tariff discounts.

Deflation in February 2025 was not as deep as the deflation in January 2025, which stood at 0.76 percent. Electricity tariffs also became a dominant factor causing deflation. At that time, electricity tariffs experienced a deflation of 33.03 percent and contributed to deflation by 1.47 percent.

Although deflation occurred in February 2025, there are still several commodities that experienced inflation. One of them is cooking oil, which recorded an annual inflation rate of 10.97 percent with a contribution of 0.13 percent.

One of the triggers for cooking oil inflation is the increase in the price of Minyakita. Kompas noted that the price of Minyakita began to creep up since June 2024. Based on data from the Market and Basic Needs Monitoring System (Kemendag), as of the end of February 2025, the national average price of Minyakita reached IDR 17,200 per liter.

The price of simple packaged cooking oil under the Minyak Goreng Rakyat program is 6.4 percent higher compared to June 2024. This price is also 8.72 percent higher than the highest retail price (HET) of Minyakita set by the Ministry of Trade at Rp 15,700 per liter.

The high price of Minyakita was raised in the Working Meeting of Commission VI of the House of Representatives (DPR) with the Ministry of Trade and Perum Bulog in Senayan, Jakarta, Monday (3/3). A number of members of Commission VI requested that the government really be able to lower the price of Minyakita, and have a long-term food stock and price stabilization strategy.

Member of Commission VI of the House of Representatives Mufti Anam asked the Ministry of Trade to prove that it can lower the price of Minyakita at least close to the HET of Rp 15,700 per liter. Although market operations have been carried out, the national average price of Minyakita is still far above the HET.

Currently, the national average price of Minyakita reaches Rp 17,200 per liter. Even in Pasuruan, East Java, the price at the retailer level reaches Rp 20,000 per liter.

"The trader was forced to sell Minyakita at such a high price because the price he got from the distributor was Rp 18,000 per liter. Enforce the price of Minyakita at the distributor as well. If it is sold higher than the specified price, revoke its permit," said Mufti.

Another member of Commission VI, Herman Khaeron, assessed that the government does not have a long-term strategy to stabilize food stocks and prices. The government actually puts more pressure on business actors to sell food prices according to reference prices through the Police Food Task Force.

"It is very ironic that Indonesia, which is the world's largest palm oil producer, is having difficulty providing around 17 percent of palm oil to meet domestic needs. In fact, almost every year we are faced with shortages and rising prices of cooking oil," he said.

Therefore, Khaeron continued, the Ministry of Trade and Bulog must have a long-term strategy. One of them is to have food stocks, including cooking oil. The food reserves can be used at any time to flood the market if there is a shortage of stock and an increase in food prices.

Responding to this, Minister of Trade Budi Santoso said that the government is trying to lower the price of Minyakita to match the HET. Various efforts have been made, such as ensuring the availability of Minyakita supplies in the market and strengthening the government's cooking oil reserves for market operations.

So far, the supply guarantee has been fulfilled through the implementation of the domestic cooking oil supply obligation (DMO) policy. The policy requires exporters of palm oil and a number of its derivative products to supply Minyakita for the domestic market.

There are some naughty D2s that apply a minimum purchase quota for Minyakita to retailers in large quantities. For example, retailers must buy 50 boxes or 100 boxes of Minyakita.

In addition, Budi continued, the Ministry of Trade has also regulated the selling price of Minyakita in each distribution line. The selling price of Minyakita from producers to first line distributors (D1) is set at IDR 13,500 per liter, D1 to D2 IDR 14,000 per liter, D2 to retailers IDR 14,500 per liter and retailers to consumers according to the HET IDR 15,700 per liter.

"So what makes the price of Minyakita higher than the HET is not because of limited supply, but more because of problems at the distribution level," he said.

Budi explained, there are some naughty D2s that apply a minimum purchase quota for Minyakita to retailers in large quantities. For example, retailers must buy 50 boxes or 100 boxes of Minyakita.

"With that limitation, only big capital retailers can afford it. Eventually, the big retailers resell to small retailers at a higher price," he said.

In addition, the Ministry of Trade has also asked palm oil industry players and cooking oil business players not to sell Minyakita in a package with other products. The Ministry of Trade also asked them to supply Minyakita to Bulog and ID Food to strengthen the government's cooking oil reserves (CMGP).

The National Food Agency stated that the CMGP prepared by Perum Bulog and ID Food as of February 26, 2025 was 99,000 kiloliters. The stock mostly came from cooking oil producers. The stock of various types of cooking oil nationally in March 2025 is estimated at 815.4 kiloliters.