Food prices could rise by 10%: Minister

Food prices are estimated to soar by over 10 percent once the government increases fuel prices early next month, which would eventually see transportation and production costs increase, a minister says.

Minister of Trade Mari Elka Pangestu said on Wednesday that the figure was a preliminary calculation based on the effects of the fuel price increase of 29 percent on average in March, which had driven food prices up by between 5 and 10 percent.

"The rise in food prices will depend on the percentage of the upcoming fuel price increase. I think the rise (in food prices) will be 10 percent at least," she said after a Cabinet meeting via video conference on Wednesday with President Susilo Bambang Yudhoyono.

Mari said fuel prices could go up in early October, before the start of the Ramadhan fasting month, during which demand for provisions is higher. She said Susilo had instructed her to carefully supervise the distribution of food in the coming weeks.

"An increase in food prices caused by the fuel price increase is tolerable. We are more concerned about the stability of prices and ensuring that there will be no stockpiling of food," she said.

Based on previous experience, food becomes more costly in the days leading up to the government's announcement of a fuel price increase but after the announcement the prices are higher still. -- JP