The Price of a Staple
For most Indonesians, tofu and tempeh are not trendy health foods or restaurant specialties. They are the backbone of everyday meals, fried, steamed, or simmered in sambal and served in homes, school canteens, and roadside stalls from Sumatra to Papua. Together they provide one of the cheapest and most widely consumed sources of protein for lower and middle income families across the country. Today, however, these humble blocks are at the center of a much larger economic drama. A sharply weaker rupiah has pushed up the cost of imported soybeans, the main raw material for both products, and producers are responding in ways that customers can see immediately. Portions are shrinking, trays are becoming lighter, and prices are creeping up. In a country where food is a daily political barometer, the message is unmistakable: the Indonesian currency crisis has reached the dinner table.
The rupiah has fallen to historic lows in recent weeks. According to market data, it traded near Rp 17,726 per US dollar on one morning and the Jakarta Interbank Spot Dollar Rate later touched Rp 18,171. The 2026 state budget had assumed an exchange rate of Rp 16,500 per dollar, a gap that has alarmed officials and businesses. Imported soybeans, which make up around 85 to 90 percent of national demand, have climbed to about Rp 11,000 per kilogram in several regions, up from the usual Rp 9,000 to Rp 10,000. For small tofu and tempeh makers, that increase is the difference between profit and loss.
Across the archipelago, producers are adapting by shrinking their products, cutting output, or raising prices. Some have done all three. The result is that a tray of tofu or a packet of tempeh may look the same on the outside but contain less than it did a month ago. For consumers who count every rupiah, this is a quiet form of inflation that is hard to avoid.
How a Currency Squeeze Reaches the Dinner Table
Indonesia is the largest economy in Southeast Asia, but it remains deeply reliant on imports for one of its most important food inputs. Nearly 90 percent of the soybeans used to make tofu and tempeh come from abroad, primarily the United States, Brazil, and Argentina. Because these beans are bought and shipped in US dollars, every rupiah that weakens against the dollar raises the domestic price of the same cargo. That relationship is the simplest explanation for why a falling currency can make a staple food more expensive before it ever reaches a frying pan.
The weakness of the rupiah is not happening in isolation. Global events have rattled currency and commodity markets. Escalating conflict in the Middle East, including threats to shipping through the Strait of Hormuz, has pushed up oil prices and disrupted supply chains. As uncertainty rises, global investors tend to move money into dollar denominated assets, which are seen as safer. That capital flight puts pressure on currencies like the rupiah. At the same time, domestic economic indicators have added to the strain. Fiscal pressures, weakening external balances, and declining foreign exchange reserves have all made investors more cautious.
The result is a form of inflation known as imported inflation. When a country buys large amounts of fuel, food, or raw materials in dollars and its own currency loses value, those imports become more expensive in local terms. The cost is then passed along, partly or fully, to consumers. In Indonesia, the effect is magnified because the country is a net oil importer, running a large deficit on oil trade. With global Brent crude prices near $95 per barrel, far above the $70 assumed in the state budget, higher transport and logistics costs are feeding into almost every product. For tofu and tempeh makers, the squeeze comes from both soybeans and the fuel used to cook and deliver their goods.
For poorer households, the stakes are especially high. Food typically accounts for 36 to 38 percent of monthly spending among low income families. When the price of a staple protein rises, families do not have much room to cut back. They either buy less protein or spend less on other necessities. Either way, nutritional security and household budgets suffer.
On the Shop Floor: Producers Face Impossible Choices
In Pejaten, Serang, Banten province, a tofu producer named Budi has watched his daily soybean consumption fall from about 200 kilograms to between 100 and 150 kilograms as costs have surged. The decision to use less raw material is not one he makes lightly. Fewer soybeans mean less tofu to sell, and less tofu means less revenue for a business that already operates on thin margins.
“To keep making a profit, we have reduced product size, cut production, and increased selling prices,” Budi said.
The price of a tray of tofu in his area has risen from around Rp 17,000 to Rp 19,300. That increase may sound modest, but for a product that is supposed to be affordable, it is meaningful. For customers, a tray of tofu is not a discretionary purchase; it is part of a daily meal plan.
In Gunungkidul, Yogyakarta, factory owner Agung Gunawan has taken a different route. He has switched to cheaper brands of soybeans and reduced ingredient portions to lower costs. The trade off is visible in quality and weight.
“Usually one box contains 250 grams, now we make it around 220 grams,” Agung said.
Despite the higher costs, demand for tofu has actually increased in recent weeks, partly because of local harvest festivals and partly because of the free nutritious meal program, known as MBG. The program provides meals to students and others, and it has created extra demand for basic proteins. For producers, that extra demand is a mixed blessing. It brings more orders but also raises the pressure to keep prices low even as input costs climb.
Ardy Firmansyah, a tempeh maker in West Tebet, Jakarta, captures the bind that many small producers face. Purchasing power is already weak, so raising prices too quickly risks driving customers away.
“If we raise prices too much, customers may stop buying, so many producers reduce the contents instead,” Ardy said.
This pattern is repeated in countless small workshops and market stalls. Rather than posting higher prices that might scare off shoppers, producers quietly make their products smaller. Economists sometimes call this shrinkflation, and it is especially common when consumers are price sensitive. In the current climate, shrinkflation is not a marketing trick; it is a survival strategy.
Beyond the Kitchen: Political Alarm Bells
The slide of the rupiah has done more than raise food prices. It has set off alarms about social stability and political legitimacy. In early June, the currency breached Rp 18,155 per US dollar, its lowest level on record. For Indonesians old enough to remember the 1997 and 1998 Asian financial crisis, such a threshold brings uncomfortable memories of bank runs, soaring prices, and street protests that helped topple a government.
The consequences of a weak currency are no longer confined to economics textbooks. They are visible in household budgets. Imported energy is pushing up transport and electricity costs. Imported soybeans are making tofu and tempeh more expensive. Imported wheat is raising noodle prices. Imported livestock feed is affecting meat and dairy. Meanwhile, real wages are stagnant, and many middle class families have moved into survival mode. They are postponing home and vehicle purchases, switching to cheaper brands, and drawing down savings to cover monthly shortfalls.
The hardship is compounded by job losses. According to government data, more than 88,000 formal sector workers were laid off in 2025, and an additional 23,470 lost their jobs between January and May 2026. West Java, the Indonesian manufacturing heartland, accounted for the largest share of these layoffs. Because temporary and informal workers often do not appear in official statistics, the real number of people affected is likely much higher. As factories slow production and consumer demand weakens, businesses are forced to choose between protecting profits and keeping workers.
All of this is happening at a politically delicate moment. President Prabowo Subianto took office promising rapid economic growth of 8 percent and ambitious welfare programs. He also made remarks that drew criticism when the rupiah was falling. Speaking at a village cooperative event in Nganjuk, East Java, on May 16, he suggested that rural communities should not worry too much about the exchange rate because they do not use dollars.
“As long as Purbaya can keep smiling, there is no need to worry. No matter how many thousand rupiah to the dollar, villages do not use dollars,” Prabowo said.
The comments went viral and were widely seen as insensitive. Economists pointed out that even rural households depend on goods whose prices are tied to imports and global markets. Livestock feed, cooking oil, fuel, and the soybeans in tofu and tempeh all connect village life to the exchange rate. A weaker rupiah raises the price of those goods, whether or not anyone in the village has ever held a dollar bill.
Public frustration has found an outlet online. The hashtag #IndonesiaGelap, or Dark Indonesia, has become a rallying cry, particularly among younger Indonesians. Students have joined street protests alongside middle and lower income citizens, airing grievances that range from a lack of transparency in government policies to concerns about the Danantara wealth fund, military influence in civilian agencies, and a perceived oversized cabinet. Political scientists describe this as relative deprivation: the gap between what people expect and what they experience. When that gap widens, economic grievances can become political crises.
Policy Response: Subsidies and Rate Hikes
Indonesian authorities have responded with a mix of monetary and sectoral measures. Bank Indonesia, the central bank, surprised markets by raising its benchmark interest rate by 50 basis points to 5.25 percent. The goal is to make holding rupiah more attractive and to slow capital outflows, thereby supporting the exchange rate. Higher interest rates, however, also make borrowing more expensive for businesses and consumers, which can slow economic growth.
On the food front, the government has moved to cushion the impact on tofu and tempeh producers. Trade Minister Budi Santoso announced a soybean subsidy of Rp 2,000 per kilogram, targeting producers of tempeh and tofu. The initial phase will cover roughly 250,000 tonnes of imported soybeans and will cost an estimated Rp 500 billion, about $27.8 million.
“Considering the significant increase in soybean prices, we decided to provide assistance to tempeh producers,” Santoso said.
Coordinating Minister for Food Affairs Zulkifli Hasan said the subsidy is intended to buffer the domestic market against the effects of the weaker rupiah, given that the country remains dependent on soybean imports. State logistics company Bulog has been assigned to distribute the subsidized soybeans directly to producers, rather than through markets, to make sure the lower input costs reach the right people.
“These products will not be distributed through the market. Instead, they will be sold directly to producers to ensure lower prices,” said Bulog President Director Ahmad Rizal Ramdhani.
The subsidy is welcome relief, but it is also a short term fix. Government spending is already under pressure. Some economists note that state spending grew by 21 percent, partly because of the MBG free meal program and the Merah Putih Village Cooperative. Fiscal space is tight. The country also faces a difficult choice over fuel subsidies. Keeping them in place widens the budget deficit; removing them raises prices and inflation. The rupiah crisis has forced the government into a balancing act that may become harder if the currency keeps falling.
A Structural Weakness Years in the Making
While the immediate problem is the exchange rate, the deeper issue is the long term dependence of Indonesia on imported soybeans. This is not a new vulnerability. As far back as 2022, critics were warning that the government had not implemented consistent policies to boost domestic production. The country has talked about food security for years, yet it continues to import roughly 80 to 90 percent of the soybeans it consumes.
Historical data shows how far domestic production has fallen. In 1992, Indonesia produced about 1.9 million tons of soybeans on 1.6 million hectares of farmland. By the 2002 to 2017 period, annual output had dropped to between 540,000 and 970,000 tons. One reason for the decline is that many tofu and tempeh producers prefer imported soybeans, which they consider higher quality and more reliable. Another is that local yields are only about half those of major producers such as the United States and Brazil, and profit margins for farmers are thin. As a result, many growers have switched to crops like chili or corn.
Food security experts have long argued that Indonesia needs a sustained, broad strategy. Suggested measures include giving state logistics agency Bulog more control over imports, linking private import quotas to domestic procurement, setting floor and ceiling prices to protect farmers and consumers, and providing subsidies and training to improve yields. Seed companies could also be encouraged to develop soybean varieties suited to the climate and soil of Indonesia.
The current crisis has put those ideas back on the agenda. Without them, Indonesia will remain exposed to every shock in global soybean markets and every swing in the rupiah. For a nation that eats tofu and tempeh every day, that is not just an economic risk. It is a daily source of anxiety.
What to Know
- The rupiah has fallen to record lows near Rp 18,155 per US dollar, raising import costs across the economy.
- Indonesia imports 85 to 90 percent of its soybeans, mainly from the United States, Brazil, and Argentina, making tofu and tempeh prices highly sensitive to the exchange rate.
- Small producers are shrinking portions, cutting output, and raising prices to cope with soybean costs that have risen from Rp 9,000 to 10,000 to about Rp 11,000 per kilogram.
- Bank Indonesia raised its benchmark interest rate by 50 basis points to 5.25 percent to support the currency.
- The government has launched a Rp 2,000 per kilogram soybean subsidy covering 250,000 tonnes, costing Rp 500 billion, to be distributed directly to tofu and tempeh producers through Bulog.
- Long term food security depends on reviving domestic soybean production, which has fallen sharply over the past three decades.
