Indofood lifts instant noodle price, may push up inflation

PT Indofood CBP Sukses Makmur , the world's top noodle maker, has raised the price of its instant noodles by roughly 10 percent a pack, in a move that lifted its share price over 4 percent but that could also push up the country's inflation.

The firm raised the price of its top brand Indomie by 100 rupiah (1.1 cents) a pack in mid-January, Franciscus Welirang, a director at parent company PT Indofood Sukses Makmur, said on Wednesday.

Higher wheat prices have affected Indonesia, which relies entirely on imports for its wheat. Southeast Asia's largest economy consumed 4.39 million tonnes of wheat flour last year, a 10.5 percent increase from 2009.

Rising prices of instant noodles, which along with rice are considered a staple food for the majority of Indonesians, may push up inflation this month, said Djamal, a deputy at the country's statistics bureau.

"If the consumption is high, it will impact inflation. Based on our records, on average the price of chilli has dropped slightly, while rice still rises a bit," he said.

Last week, the statistics bureau head said monthly inflation in January would be around 0.5 percent, and inflationary pressures would not be as high as last month, when inflation reached a 20-month high at 6.96 percent year-on-year because of rising food costs.

Higher-than-expected inflation in January will pressure the central bank to raise rates, which it has held at a record low 6.5 percent for over a year.

Investors have sold off Indonesian assets this year on worries the central bank may be behind the curve in tackling inflation. Indofood's rally on Wednesday pushed its stock up 1.6 percent for the year, versus a 5.5 percent decline for the index . ($1 = 9,036 rupiah). Source: Reuters