This work is licensed under a Creative Commons Attribution 4.0 International License.
Analysis of the Impact of Basic Needs Price Increases on Per Capita Income in Indonesia: A Review from a Domestic Economy Perspective
Corresponding Author(s) : Supardi Supardi
American Journal of Economics and Business Management,
Vol. 5 No. 8 (2022): American Journal of Economics and Business Management
Abstract
Cost escalation of essential goods has an important effect on a country's per capita income. This research seeks to examine the impact of rising prices of basic necessities on per capita income in Indonesia, with a focus on the internal economic outlook. Utilization of panel data regression analysis techniques was used to assess the correlation between price spikes in essential goods and per capita income, while considering various additional economic and demographic variables. The findings of this investigation reveal that the surge in prices of essential goods has had a significant impact on per capita income in Indonesia. A decrease in purchasing power due to increased prices of essential goods can reduce the actual income of individuals and households, consequently affecting overall per capita income. This impact is particularly profound among households with limited income levels. Other elements such as inflation, economic expansion, and government strategy also contribute to determining the consequences of rising prices of essential goods on per capita income. Consequently, there is a need for appropriate policies to efficiently address rising prices of basic necessities, including measures to manage inflation, strengthen social safety nets, and improve economic efficiency. In short, rising prices of essential goods have major consequences for per capita income in Indonesia. Inclusive and enduring strategies are essential in designing economic policies that can overcome these obstacles, while taking into account the various external and internal factors that influence the intricacies of the domestic economy.
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- A. A. Mirrahma, M. A. Septiani, and M. Panorama, “Determinasi Tingkat Kemiskinan di Sumatera Selatan Tahun 2019-2022,” JESI (Jurnal Ekon. Syariah Indones., vol. 13, no. 1, p. 144, May 2023, doi: 10.21927/jesi.2023.13(1).144-156.
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References
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A. Bhattacharjee, E. Castro, and C. N. Jensen-Butler, “Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy,” SSRN Electron. J., 2007, doi: 10.2139/ssrn.1112063.
A. Fatoureh Bonab, “A review of inflation and economic growth,” J. Manag. Account. Stud., vol. 5, no. 02, pp. 1–4, Aug. 2019, doi: 10.24200/jmas.vol5iss02pp1-4.
A. Girik Allo, E. Satiawan, and L. A. Arsyad, “The Impact Of Rising Food Prices On Farmers’ Welfare In Indonesia,” J. Indones. Econ. Bus., vol. 33, no. 3, p. 193, Jan. 2019, doi: 10.22146/jieb.17303.
A. M. Lyakhovetsky, L. A. Barsukova, and E. V. Sokurova, “Consumer basket and purchasing power of the population,” Bull. Acad., vol. 1, no. 68, pp. 61–66, 2022, doi: 10.36871/v.a.2022.03.01.008.
A. Montenegro, “Income, Equality, and Economic Development,” Soc. Sci. Q., vol. 102, no. 1, pp. 508–522, Jan. 2021, doi: 10.1111/ssqu.12908.
A. Triantafyllou, G. Dotsis, and A. Sarris, “Assessing the Vulnerability to Price Spikes in Agricultural Commodity Markets,” J. Agric. Econ., vol. 71, no. 3, pp. 631–651, Sep. 2020, doi: 10.1111/1477-9552.12377.
B. Uspri, S. Karimi, I. Indrawari, and E. Ridwan, “The effect of inflation on income inequality: Evidence from a non-linear dynamic panel data analysis in indonesia,” Decis. Sci. Lett., vol. 12, no. 3, pp. 639–648, 2023, doi: 10.5267/j.dsl.2023.4.001.
C. Ilter, “What Economic and Social Factors Affect GDP Per Capita? A Study on 40 Countries,” SSRN Electron. J., 2016, doi: 10.2139/ssrn.2914765.
C. Zhang, L. Gong, Y. Peng, and Y. Fu, “Price Spike Classification and Regression Using A Hybrid Oversampling Method,” in 2022 North American Power Symposium (NAPS), IEEE, Oct. 2022, pp. 1–6. doi: 10.1109/NAPS56150.2022.10012270.
F. Faharuddin, M. Yamin, A. Mulyana, and Y. Yunita, “Impact of food price increases on poverty in Indonesia: empirical evidence from cross-sectional data,” J. Asian Bus. Econ. Stud., vol. 30, no. 2, pp. 126–142, May 2023, doi: 10.1108/JABES-06-2021-0066.
H. Firmansyah, “Policy Model for Muslim State Inflation Control,” Int. J. Nusant. Islam, vol. 9, no. 1, pp. 93–105, Jun. 2021, doi: 10.15575/ijni.v9i1.11984.
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I. Bobojonov, I. Duric, and T. Glauben, “Heterogeneous impact of price spikes across countries and supply chain actors: An evidence from Central Asia and the Caucasus. A review,” Agric. Econ. (Zemědělská Ekon., vol. 66, no. 2, pp. 92–100, Feb. 2020, doi: 10.17221/130/2019-AGRICECON.
J. Caron and T. Fally, “Per Capita Income, Consumption Patterns, and CO₂ Emissions,” Cambridge, MA, Aug. 2018. doi: 10.3386/w24923.
J. Godek and K. B. Murray, “Effects of Spikes in the Price of Gasoline on Behavioral Intentions: A Mental Accounting Explanation,” J. Behav. Decis. Mak., vol. 25, no. 3, pp. 295–302, Jul. 2012, doi: 10.1002/bdm.735.
J. Zhang, K. Prettner, S. Chen, and D. E. Bloom, “Beyond GDP: Using healthy lifetime income to trace well-being over time with estimates for 193 countries,” Soc. Sci. Med., vol. 320, p. 115674, Mar. 2023, doi: 10.1016/j.socscimed.2023.115674.
K. R. N. and F. E. Dodo, “Impact Of Petroleum Products Price Changes On Prices Of Food Items In The Nigerian Economy,” J. Dev. Econ. Financ., vol. 4, no. 1, pp. 79–95, 2023, doi: 10.47509/JDEF.2023.v04i01.05.
K. Saputri and D. W. Udjianto, “Pengaruh Pertumbuhan Ekonomi, Ketimpangan Pendapatan, Investasi Domestik, Pendidikan, Swamedikasi, dan Pengangguran Terbuka terhadap Kedalaman Kemiskinan di Indonesia,” Ekopem J. Ekon. Pembang., vol. 5, no. 1, pp. 29–38, Mar. 2023, doi: 10.32938/jep.v5i1.3948.
L. Prados de la Escosura, “Health, income, and the preston curve: A long view,” Econ. Hum. Biol., vol. 48, p. 101212, Jan. 2023, doi: 10.1016/j.ehb.2022.101212.
M. Salimi, “An Analytical Model For Determining The Per Capita Index Of Sports Places And Spaces,” J. Urban Reg. Anal., vol. 14, no. 1, Jan. 2022, doi: 10.37043/JURA.2022.14.1.6.
Mawardati, Jullimursyida, Azhar, Iga Mayada, and Eva Juwita, “The Impact Of Increasing Cooking Oil Prices On Food Consumption Patterns In Various Household Income Groups In Aceh Province,” Int. J. Econ. Business, Accounting, Agric. Manag. Sharia Adm., vol. 3, no. 1, pp. 289–295, Feb. 2023, doi: 10.54443/ijebas.v3i1.686.
N. Hossain and P. Scott-Villiers, “Purchasing and Protesting: Power from Below in the Global Food Crisis,” IDS Bull., vol. 50, no. 2, Jul. 2019, doi: 10.19088/1968-2019.119.
N. Lagerlöf, “Understanding Per‐Capita Income Growth In Preindustrial Europe,” Int. Econ. Rev. (Philadelphia)., vol. 60, no. 1, pp. 219–240, Feb. 2019, doi: 10.1111/iere.12350.
O. A. Obrimah, “Income Inequality and Per Capita Income: Equilibrium of Interactions,” SSRN Electron. J., 2020, doi: 10.2139/ssrn.3551909.
O. TASDOKEN and H. KAHYAOGLU, “Analysis Of The Global Food Crisis In International Markets By The Asymmetric TVP-VAR Method,” Eurasian Res. J., vol. 5, no. 1, pp. 59–71, Feb. 2023, doi: 10.53277/2519-2442-2023.1-04.
O. Yilmaz, “International welfare comparison using GDP and better life index parameters,” Pressacademia, vol. 4, no. 1, pp. 1–14, Mar. 2017, doi: 10.17261/Pressacademia.2017.361.
P. B. Brito, “The dynamics of growth and distribution in a spatially heterogeneous world,” Port. Econ. J., vol. 21, no. 3, pp. 311–350, Sep. 2022, doi: 10.1007/s10258-022-00222-1.
R. Dědeček and V. Dudzich, “Exploring the limitations of GDP per capita as an indicator of economic development: a cross-country perspective,” Rev. Econ. Perspect., vol. 22, no. 3, pp. 193–217, Sep. 2022, doi: 10.2478/revecp-2022-0009.
R. Nabila, I. P. Syahna, K. I. Daulay, and S. Wulandari, “Kemiskinan dan Ketimpangan Melalui Prevelensi Ketidakcukupan Konsumsi Masyarakat di Indonesia,” El-Mujtama J. Pengabdi. Masy., vol. 3, no. 3, pp. 760–769, Feb. 2023, doi: 10.47467/elmujtama.v3i3.2934.
R. O’Neill, J. Ralph, and P. A. Smith, “What Is Inflation?,” in Inflation, Cham: Springer International Publishing, 2017, pp. 21–43. doi: 10.1007/978-3-319-64125-6_2.
R. R. Yas Khudair and S. Sabir Mohammed, “The effect of economic stationary variables on the growth in per capita income in Iraq for the period (1990 - 2021) by using the autoregressive distributed lag (ARDL) model,” Wasit J. Pure Sci., vol. 1, no. 3, pp. 115–125, Dec. 2022, doi: 10.31185/wjps.72.
Reza Setiawan and Rosita, “Dampak Kenaikan Harga Bahan Bakar Minyak (BBM) Tahun 2022 Terhadap Tingkat Pendapatan Pedagang Di Pasar Cakranegara Kota Mataram,” Nusant. Hasana J., vol. 2, no. 10, pp. 44–49, Mar. 2023, doi: 10.59003/nhj.v2i10.797.
S. Machmud and I. Sidharta, “The relationship between regional development, human development and poverty: A perspective from the Indonesian province,” Nurture, vol. 17, no. 3, pp. 157–165, May 2023, doi: 10.55951/nurture.v17i3.283.
S. Suginam, J. Afriany, M. Sianturi, and S. Rahayu, “Pengaruh Inflasi Terhadap Minat Beli Konsumen Terhadap Produk,” Ekon. Keuangan, Investasi dan Syariah, vol. 4, no. 2, pp. 436–441, Nov. 2022, doi: 10.47065/ekuitas.v4i2.2395.
Winne Ayunda Gaiska, Naufal Gama Affandyar, and Muhammad Yasin, “Analisis Penyebab, Konsekuensi, Dan Solusi Potret Kemiskinan Di Kabupaten Mojokerto Pasca Reformasi,” J. Akuntan Publik, vol. 1, no. 2, pp. 141–149, May 2023, doi: 10.59581/jap-widyakarya.v1i2.386.
Y. Wang, “Inflation Surge: Impact of COVID-19 Pandemic and Ukraine Conflict,” Highlights Business, Econ. Manag., vol. 10, pp. 393–397, May 2023, doi: 10.54097/hbem.v10i.8127.
Z. Alma’ruf, “The Effect of Economic Growth, Population, Minimum Wage, and HDI on Poverty,” Effic. Indones. J. Dev. Econ., vol. 6, no. 1, pp. 107–117, Jan. 2023, doi: 10.15294/efficient.v6i1.55225.
Z. G. Sha and R. Xiu, “Inflation Scheme Derived from Universal Wave Function Interpretation of String Theory,” J. Astrophys. Aerosp. Technol., vol. 05, no. 01, 2017, doi: 10.4172/2329-6542.1000147.