Cooking oil prices hot up amid global food inflation, Ukraine war

Cooking oil prices have increased since the start of the year amid rising food prices globally and because of the war in Ukraine.

Food prices around the world have risen following the Covid-19 pandemic, which started in 2020, supply chain disruptions and increasing energy prices.

The situation has been exacerbated by Russia's invasion of Ukraine in February, which pushed up prices in the commodity markets.

Russia and Ukraine are major global exporters of grains and edible oils, supplying almost 75 per cent of the world's sunflower oil. Following the crisis, prices of edible oils rose. Palm oil prices have more than doubled since the middle of June last year.

Supermarket chain FairPrice said the protracted pandemic and the war in Ukraine have disrupted the global economy and supply chains on an unprecedented scale.

"This has resulted in significant increases in the cost of freight, wages, energy, raw materials, and manpower for the production of edible oil products," said its spokesman this month in response to queries from The Straits Times.

FairPrice kept the prices of its house-brand edible oils stable in the 12 months until April, and adjusted them only last month after costs - including freight - spiked 40 per cent to 60 per cent for its house-brand edible oils.

"Nonetheless, we are the last (supermarket) to raise prices and have also absorbed the bulk of the additional cost by moderating the price increase to between 3 per cent and 17 per cent for our range of edible oils," added the spokesman.

FairPrice also said that since the beginning of the year, the price increase of edible oils under national brands - prominent or established products distributed nationally - has ranged from 11 per cent to more than 20 per cent, depending on the brand, pack size, variant and country of origin.

DFI Retail Group, which runs Cold Storage and Giant supermarkets, said that while it is facing increasing cost pressures and supply impact as a result of global developments, it continues to work to minimise the impact by, for example, keeping prices of key essentials such as oil low at Giant.

Last month, world food commodity prices decreased slightly from March's all-time high - by 0.8 per cent, according to the Food and Agriculture Organisation of the United Nations.

However, the prices in April remained nearly 30 per cent higher than in April last year, as the Russia-Ukraine crisis continues to impact markets for staple grains and vegetable oils.

In the past six months, vegetable oil prices have already risen more than 50 per cent as factors from labour shortages in Malaysia to droughts in Argentina and Canada - the biggest exporters of soya bean oil and canola oil, respectively - curtailed supplies.

Consumers such as Madam Rose Tan, 62, are concerned that cooking oil prices have been rising recently. The housewife noticed that prices have increased up to $2 for a two-litre cooking oil bottle since the start of this year.

"Cooking oil is essential for cooking, so I hope the prices don't go up further, or else I may need to cut back on my usage of cooking oil," she said last week.

Besides consumers, hawkers are also feeling the pinch from rising cooking oil prices.

At Changi Village Hawker Centre, Madam Mizrea Abu Nazir, 50, who runs Mizzy Corner Nasi Lemak, uses up to two tins of vegetable cooking oil a day. She started paying $46 for a 16kg tin from March, up from $26 previously.

To save costs, Madam Mizrea would keep a lookout for promotions at Giant supermarket, where a five-litre cooking oil bottle can be priced as low as $8.

According to her, these cooking oil bottles usually sell out within a day after a promotion is launched, and there is a limit on how many bottles each person can buy.

"So you really must be fast… If I want to buy more, I get 10 people to go with me to Giant," she said last Tuesday.

At the same hawker centre, Madam Teo Teow Tee, who runs Mei Xiang Goreng Pisang with her husband, is bearing some of the costs as cooking oil prices continue to rise.

Said the 70-year-old: "We don't even dare to increase the price of our food much because customers complain even when we increase prices by only 10 or 20 cents. People don't understand that prices of everything - not just oil but also other ingredients like yam - are increasing nowadays."

The couple, who use a 16kg tin of vegetable cooking oil every one to two days to fry their food products, such as bananas, tapioca and yams, said they replace their cooking oil frequently to ensure it is fresh for frying.

The cooking oil now costs $54 per tin, up from about $30 two to three months ago.

Madam Teo is worried that cooking oil prices will continue to rise, especially when her supplier has already increased prices by more than $20 recently.

"There may be suppliers offering cheaper oil, but we don't wish to compromise on the quality of the oil and our food," she added.

Over at East Coast Lagoon Food Village, Ms Jolin Chu, 48, who runs Eastern Red Seafood, said cooking oil prices have increased on three occasions since January.

In 2020, a 15kg tin of vegetable cooking oil cost about $20. It now costs $46. Ms Chu said her supplier has been preparing her for a potential rise in prices, and she expects the same tin to cost about $50.

To cope with higher cooking oil prices and other overheads, Ms Chu has held the prices of most dishes steady but reduced the quantity of food served. For example, she reduced the number of cockles from 18 to 16 for one dish.

"I feel that increasing prices will pose a (financial) burden to consumers, especially since the economy is so poor now. On the other hand, if I decrease the quantity a little, it would not have that much of an impact," said Ms Chu.