Instant-noodle makers ask Thailand for price increase under 14-year cap

MSN

Instant-noodle makers ask Thailand for price increase under 14-year cap

Instant noodles are known around the world as a cheap and easy meal. But the makers of five instant-noodle brands sold in Thailand said this week that


they can’t afford to keep their products as cheap as the Thai government wants them to.


With inflation looming, the Thai Commerce Ministry said in June that it would maintain a price cap on dozens of goods and services to reduce the impact of rising prices on residents of the Southeast Asian kingdom. Consumer prices in Thailand were up 7.6 percent year-on-year in July, according to Moody’s Analytics.


On Monday, however, the manufacturers of the Mama, Sue Sat, Wai Wai, Yam Yam and Nissin brands of instant noodles — the latter of which makes the Cup Noodles and Top Ramen products — said they would request permission from the Thai government to increase their prices by a third, from 6 baht to 8 baht (about 23 cents), according to state media. Prices have been set at 6 baht for about 14 years.


The noodle makers said they were losing money by selling their products for the low prices mandated by the cap amid rising costs for ingredients and fuel, in large part due to Russia’s invasion of Ukraine. Wheat futures this month were $8 per bushel, down from a peak of about $12.50 in May, though still high by historical standards.


The manufacturers said they would submit their request on Tuesday. The Commerce Ministry did not respond to a request for comment about whether it would allow the 2 baht increase, which is less than 6 cents. A senior ministry official, Wattanasak Sur-iam, said in a statement to Reuters that the government would consider such requests on a case-by-case basis and that any change would need to benefit consumers and producers.


The manufacturers said that if their request was not approved, they would reduce their sales inside Thailand and instead export their products, free from the price cap, state media reported. Many Western economists consider price caps to be an inefficient method of controlling inflation, though the recent bout of global inflation has prompted some to reconsider its utility.


There are concerns about rising instant-noodle prices elsewhere in Asia, where the food is especially ubiquitous. Indonesia’s agriculture minister warned this month that instant-noodle prices could increase as much as three times under stresses on supply chains due to climate change and the Russian invasion, CNBC Indonesia reported.


The war in Ukraine has sent food and fuel prices skyrocketing, with grocery prices in the United States this month more than 12 percent higher than last summer. In some of the world’s poorest countries, the war has worsened ongoing hunger crises, experts say. The U.N. World Food Program said this year that a record 345 million people globally were food insecure or at high risk, driven by the invasion of Ukraine and the coronavirus pandemic.


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