Retail Entrepreneurs Say Import Prices Rise by 10 Percent due to Weakening Rupiah

JAKARTA - The Indonesian Association of Retailers and Mall Tenants (Hippindo) revealed that the prices of a number of imported goods sold in modern retail have risen in the range of 5-10 percent in the last two months.

The increase was triggered by the weakening of the rupiah exchange rate against the US dollar which increased the cost of procuring imported goods.

The General Chairman of Hippindo Budihardjo Iduansjah said the weakening of the exchange rate had encouraged business actors to adjust selling prices, especially for products that still depend on raw materials from abroad.

"It has been rising for the past one or two months, yes, we have raised prices," Budihardjo said when met by reporters at the Coordinating Ministry for Economic Affairs, Jakarta, Thursday, August 6.

Even so, Budihardjo emphasized that business actors are trying to hold back the price increase so that it does not burden consumers too much. According to him, the most needed thing for the business world today is exchange rate stability, not merely a stronger rupiah.

"Actually, the dollar or rupiah is the important thing, yes, don't go up and down like that. So, if it is stable, whatever, yes, we can calculate the selling price," he said.

Budihardjo explained that if the exchange rate continues to fluctuate, business actors will find it difficult to calculate the cost of procuring goods and determine the selling price. Therefore, retailers are trying to be efficient to reduce the impact of the exchange rate increase on product prices.

Apart from exchange rate pressure, he admitted, retail players' profitability was also under pressure. Although sales are still growing, profit margins are shrinking as companies choose to maintain people's purchasing power through various discount programs.

"Our turnover increased, but there was a decrease in profit. Well, that is a strategy to increase sales by reducing profit. So with discounts, automatically, right, our profit is reduced," said Budihardjo.

According to Budihardjo, the weakening of the exchange rate also eroded profit margins because some of the costs of procuring goods still depend on imports.

"Because of this problem, right now the cost and the rise in the dollar. The weakening of the rupiah, right, also erodes our profits. Well, we are trying to stabilize prices," he explained.

Meanwhile, Director of Trade Business Development of the Directorate General of Domestic Trade of the Ministry of Trade (Kemendag) Franciska Simanjuntak said that the increase in commodity prices was influenced by many factors.

He said that business actors also bear the burden by cutting margins through promotional and discount programs so that sales remain maintained.

"So, in fact, it's not just consumers who feel that the price of goods has risen, but from the business actors themselves, there are also many sales, many prices are suppressed. That, of course, the profits are also eroded so that sales increase and of course also to make the wheels of the economy turn," he explained.

Franciska added that the government continues to support the implementation of various shopping festival programs throughout the year as an effort to maintain household consumption in the midst of declining people's purchasing power and the low season period that takes place before Christmas and New Year (Nataru).