| Almost everyone has experienced the constant rise in prices of daily necessities. This phenomenon is known as inflation. Essentially, inflation occurs when the prices of goods and services increase continuously over a period of time. While price increases are sometimes considered normal, this condition can become a serious problem if not offset by increases in people’s incomes. High inflation can reduce purchasing power, increase the cost of living, and even cause instability in a country’s economy. Therefore, understanding the causes and impacts of inflation is crucial so that the public and government can work together to find solutions to control it.
Inflation in Indonesia has fluctuated over the past few years, influenced by global economic dynamics and domestic policies. After the COVID-19 pandemic, inflation declined due to weakened purchasing power. However, when economic activity recovered, prices rose again, primarily driven by increases in fuel and basic necessities. In the history of the national economy, Indonesia’s inflation rate in 2024 was recorded as the lowest, at only 1.57% (year-to-date/ytd). This achievement seems like positive news for the Indonesian economy. But is it really? Jakarta, KBRN Minister of Home Affairs (Mendagri), Tito Karnavian, stated that Indonesia’s inflation rate is low compared to ASEAN countries. Indonesia ranks fourth lowest out of 11 countries, with an inflation rate of 1.57%. This is lower than the IMF’s initial projection of 2.6%. This statement was made at the 2024 Regional Inflation Control Coordination Meeting held in Jakarta on Monday (January 8, 2024). According to Tito, this achievement demonstrates that inflation control measures in Indonesia are working quite well. After Indonesia, other countries with low inflation are Cambodia (3.2%), Vietnam (3.58%), Singapore (3.6%), and the Philippines (4.1%). Countries with higher inflation rates include Timor Leste (9%), Laos (24.37%), and Myanmar, which recorded the highest inflation rate in ASEAN at 28.58%. Indonesia’s low inflation in 2024 was primarily influenced by the government’s success in maintaining food price stability. Food is a key component in calculating inflation this year. Although there was a sharp decline in staple food prices, resulting in several months of deflation, this demonstrated the effectiveness of government policies in stabilizing prices. Meanwhile, in 2025, year-on-year (y-o-y) inflation in January was recorded at 0.76%, with a Consumer Price Index (CPI) of 105.99. Currently, the highest inflation rate is in the Papua Mountains Province, at 4.55%, with a CPI of 112.06, while the lowest is in Central Sulawesi, at 0.02%, with a CPI of 105.90. Inflation weakens the value of money, increasing the prices of goods and services. Consequently, people are unable to purchase as much as before. Low-income groups feel the most pressure because the majority of their income is spent on basic necessities. Furthermore, inflation drives changes in spending patterns, such as seeking discounts, buying in bulk, or switching to cheaper brands. If uncontrolled, inflation can depress purchasing power and worsen economic conditions. However, with appropriate policies and public awareness in managing consumption, inflation can be kept at a reasonable level, thereby maintaining economic stability and improving public welfare. By: Ilma Nur Olivia Putri Write and Win: Participate in Creative writing Contest & International Essay Contest and win fabulous prizes.
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