Analyzing Factors Affecting Indonesian Food Price Inflation

  • Alan Ray Farandy Indonesian Institute of Sciences
DOI: https://doi.org/10.14203/JEP.28.1.2020.65-76
Keywords: inflation, food, energy

Abstract

In the last decade, inflation in Indonesia dominantly influenced by volatile food (consists mostly of food commodities) and administered price, the core inflation has been relatively stable. The food contribution in the Living Cost Survey (SBH) has a substantial contribution in order to measuring the inflation. This paper aims to analyze empirical condition how the pattern of food price with other commodities price, particularly on energy commodities (housing and transportation). Using monthly series of consumer price index from 2004 to 2017 with 168 series total observation, we estimated a vector error-correction model (VECM). With assumption that the prices variable in estimation process have perfect information, the paper shows that the major drivers of Indonesian food price inflation are the food itself up to the two previous periods by the demand supply interaction rather than housing and transportation prices. Therefore, the authorities of inflation controlling are likely to be focus on maintaining the supply and demand of food commodities to control food price inflation.

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Published
2020-12-17
How to Cite
Farandy, Alan Ray. 2020. “Analyzing Factors Affecting Indonesian Food Price Inflation”. Jurnal Ekonomi Dan Pembangunan 28 (1), 65-76. https://doi.org/10.14203/JEP.28.1.2020.65-76.
Issue
Vol. 28 No. 1 (2020)
Section
Article

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