Jakarta. Indonesia plans to raise the government-set retail price ceiling for its subsidized cooking oil brand, Minyakita, as higher palm oil and packaging costs squeeze producers and distributors, Trade Minister Budi Santoso said on Thursday.

The move comes as global crude palm oil (CPO) prices are expected to remain high through the second half of 2026, supported by stronger biodiesel demand, high crude oil prices, and the risk of weather-related supply disruptions.

"Following the previous meeting at the Coordinating Ministry for Food Affairs, we have agreed to increase the highest retail price for Minyakita," Budi told reporters in Jakarta.

The government has yet to decide the size of the increase or its implementation date, saying it will first monitor palm oil price movements over the next one to two weeks.

According to Budi, production costs have risen significantly, partly because of higher plastic packaging prices linked to increases in global naphtha costs. Meanwhile, fluctuations in crude palm oil prices, the main raw material for cooking oil, have made a price adjustment increasingly difficult to avoid.

Benchmark CPO prices recently climbed to an average of around Rp 15,445 ($0.86) per kilogram before retreating to about Rp 14,000 per kilogram. Prices for fresh fruit bunches, the raw product harvested by palm growers, have also resumed an upward trend after a brief decline, he said.

"We will wait until prices become relatively stable before determining the new retail ceiling for Minyakita," Budi said. "If CPO prices normalize, we expect to make the adjustment within one to two weeks."

Minyakita, launched by the government to ensure affordable cooking oil supplies, has become a key instrument in controlling food inflation in the world's largest palm oil producer and exporter. The official retail price ceiling for Minyakita is currently set at Rp 15,700 per liter. 

Tungkot Sipayung, executive director of the Palm Oil Strategic Policy Institute (Paspi), said international CPO prices could rise to as much as $1,500 per metric ton in the second half of the year, driven by elevated crude oil prices, Indonesia's planned rollout of mandatory B50 biodiesel blending, and the potential impact of El Nino weather conditions on production. As of Thursday, the benchmark Malaysian palm oil futures traded below MYR 4,650 ($1,157) per tonne, retreating from a recent rally as investors locked in profits after prices reached a two-week high.

"International CPO prices will depend on how long crude oil prices remain elevated," Tungkot said. "Even if geopolitical tensions ease, damaged oil infrastructure will take time to recover."

Indonesia plans to implement mandatory B50 biodiesel blending from July 1, increasing domestic consumption of palm oil feedstock and potentially tightening global supplies. At the same time, forecasts of El Nino conditions later this year could curb output in major producing countries, providing additional support for prices.