Inflation in Indonesia

Inflation is an economic phenomenon that is very interesting to discuss, especially with

regard to its broad impact on macroeconomic aggregates. Inflation is also a problem that

every economy faces. The extent to which this problem is bad varies from one time to

another, and also from one country to another. The inflation rate is the percentage increase in

prices in a given year, usually used as a measure to show the extent of the economic problems

faced. In general, the cause of inflation in Indonesia occurs due to pressure from the demand

side (Demand Pull Inflation) and from the supply side (Cost Push Inflation), the increase in

production costs, assumptions with the same capital, pressure from outside, namely the

depreciation of the rupiah and also because of prices. foreign goods (Imported Inflation).

nflation not only causes bad effects, the benefits of inflation are also quite a lot, such as:

- Increase in employee salaries

Inflation that is not too high allows for a salary increase. People think that the medium

inflation ratio makes it easier for them to adjust to their relative salary.

- Deflation

Negative inflation can have a very bad impact on the country and its people. A case that

happened in Japan showed that the country experienced very slow economic growth in times

of inflation due to deflationary pressures.

When the price of goods falls, people hesitate and are afraid to spend their money because

they are afraid that the price will fall even more in the future. What's more, deflation

increases the real value of debt and lowers disposable income (income that is ready to be

spent) in people struggling with debt.

- Relative price adjustment

As with salary adjustments, moderate inflation makes it easier to adjust relative prices. In the

case of Europe, this is very important for a single currency zone like the Blue Continent.

The very low inflation ratio in Europe forced the government to cut wages and prices of

goods, which resulted in slower economic growth.

- Increase growth

Sometimes when the inflation rate is very low, the economy is stuck and stuck in a recession.

Therefore, targeting a higher inflation ratio could allow for an increase in economic growth.

However, this perspective is considered controversial and not many economists recommend a

higher inflation rate as a target if a country experiences a prolonged recession.

- Entrepreneurs will benefit

In this case, not all entrepreneurs can take advantage of inflation. If an entrepreneur can earn

a higher income than

he increase in production costs that must be borne, it can be said that he benefits from the

inflation that occurs.

- People who owe in the bank can take advantage

Debtors or debt recipients benefit because the central bank will raise interest rates when

inflation occurs. This causes the value of money to go down, so the money they pay has a

lower value than when they first received it.

The following are some parties who actually benefit from inflation, such as: entrepreneurs

who have higher incomes than the increase in production costs, entrepreneurs, debtors,

speculators (people who hoard goods), and traders.

From the explanation above, we can conclude that inflation is a problem faced by every

economy. The percentage increase in prices in a given year, usually used as a measure to

show how bad the economic problems faced by a country are. There are also positive impacts

of inflation such as: increase in employee salaries, deflation, increase in relative goods,

increase growth and can provide benefits to entrepreneurs. Employees, businessmen, debtors,

traders, and speculators also feel the positive impact of inflation. Hopefully we can take

lessons from the points described above, and hopefully we can become the nation's future

youth who care about economic development in Indonesia.

Source : https://jurnal-sdm.blogspot.com/2009/06

https://www.bi.go.id