The Contribution of Inflation and Price Stability to Public Purchasing Power in Indonesia: JEL Classification: E31, E64, D12, E21

Fesya Diva Annisa; Alfia Damar  Yanti; Yehezkiel William  Rossi; Maria Melisa  Sutomo; Ahmad Setiawan  Nuraya

doi:10.55885/jmap.v6i2.1014

Authors

Fesya Diva Annisa Management, STIE Indonesia Banking School, Indonesia
Alfia Damar Yanti Management, STIE Indonesia Banking School, Indonesia
Yehezkiel William Rossi Management, STIE Indonesia Banking School, Indonesia
Maria Melisa Sutomo Management, STIE Indonesia Banking School, Indonesia
Ahmad Setiawan Nuraya Management, STIE Indonesia Banking School, Indonesia

DOI:

https://doi.org/10.55885/jmap.v6i2.1014

Keywords:

Inflation, Price Stability, Public Purchasing Power, Indonesia, Literature Study

Abstract

This study aims to analyze the contribution of inflation and price stability to the purchasing power of people in Indonesia using a literature review approach. Inflation is defined as a phenomenon of general and continuous increases in the prices of goods and services that can erode people's real income. Secondary data covering the period from 2020 to 2025 shows significant fluctuations in the inflation rate and its impact on consumption capacity. The results of the data analysis indicate that the highest inflation rate occurred in 2022 at 5.51%, which coincided with the lowest point of real purchasing power. Conversely, during the 2023–2025 period, controlled inflation and the stability of the Consumer Price Index (CPI) contributed positively to an increase in real purchasing power. These findings confirm that there is a close relationship where uncontrolled inflation reduces purchasing power, while price stability plays a crucial role in maintaining the economic welfare of the community. This research recommends the importance of government policies in maintaining price stability to protect the public from economic pressure.

References

Afriwan, A., Putra, A., & Fahmi, A. (2025). Analyzing The Impact of Human Development Index, Inflation, And Unemployment on Poverty Levels in Jambi Province. Jurnal Prajaiswara, 6(2), 593–606. https://doi.org/10.55351/prajaiswara.v6i2.220

Ali, A. K., & Asfaw, D. M. (2023). Nexus between inflation, income inequality, and economic growth in Ethiopia. Plos one, 18(11), e0294454. https://doi.org/10.1371/journal.pone.0294454

Allam, Z., Bibri, S. E., & Sharpe, S. A. (2022). The rising impacts of the COVID-19 pandemic and the Russia–Ukraine war: energy transition, climate justice, global inequality, and supply chain disruption. Resources, 11(11), 99. https://doi.org/10.3390/resources11110099

Aurelia, A., Rahmatillah, F., Amelia, N., Waruwu, S. Y., & Yahya, S. N. (2025). Ekonomi dasar. Media Pustaka Indo, Cilacap, Jawa Tengah.

Bashir, F., & Rashid, B. (2019). Exploring the impact of foreign direct investment, consumption, inflation, and unemployment on GDP per capita. Journal of Policy Options, 2(2), 64-76.

Bashir, S., Joby, A., Wani, F., Bhat, M. A., & Alam, T. (2026). Shrinking Sizes, Swelling Prices: Evaluating the Ripple Effects of Inflation and Shrinkflation on Economic Growth Using Dynamic Panel Framework. Global Journal of Emerging Market Economies, 18(1), 29-50.

Ben Hassen, T., & El Bilali, H. (2022). Impacts of the Russia-Ukraine war on global food security: towards more sustainable and resilient food systems?. Foods, 11(15), 2301. https://doi.org/10.3390/foods11152301

Berazneva, J., & Lee, D. R. (2013). Explaining the African food riots of 2007–2008: An empirical analysis. Food policy, 39, 28-39. https://doi.org/10.1016/j.foodpol.2012.12.007

Blanchard, O., Erceg, C. J., & Lindé, J. (2017). Jump-starting the euro-area recovery: would a rise in core fiscal spending help the periphery?. NBER macroeconomics annual, 31(1), 103-182.

Blanchard, O., Leandro, A., & Zettelmeyer, J. (2021). Redesigning EU fiscal rules: From rules to standards. Economic Policy, 36(106), 195-236. https://doi.org/10.1093/epolic/eiab003

Chola, K., & Silwimba, P. (2025). Examining The Effects of Inflation on The Purchasing Power of Basic Goods: A Case Study of Kanyama, Lusaka, Zambia. Journal of Economics, Business, and Commerce, 2(2), 306-317. https://doi.org/10.69739/jebc.v2i2.1089

Cornelsen, L., Green, R., Turner, R., Dangour, A. D., Shankar, B., Mazzocchi, M., & Smith, R. D. (2015). What happens to patterns of food consumption when food prices change? Evidence from a systematic review and meta‐analysis of food price elasticities globally. Health economics, 24(12), 1548-1559. https://doi.org/10.1002/hec.3107

Dandara-Tabacaru, D., & Danila, M. I. (2017). Financial system stability and social welfare. Revista de Cercetare si Interventie Sociala, 56, 153.

Dao, M. C., Gourinchas, P.-O., Leigh, D., & Mishra, P. (2024). Understanding the international rise and fall of inflation since 2020. Journal of Monetary Economics, 148(Supplement), Article 103658. https://doi.org/10.1016/j.jmoneco.2024.103658

Darby, J., & McIntyre, S. (2018). The output gap: what is it, how can it be estimated and are they fit for policy makers' purposes?. Fraser of Allander Economic Commentary, 42(2), 44-50.

Das, D., Sarkar, A., & Debroy, A. (2022). Impact of COVID‐19 on changing consumer behaviour: Lessons from an emerging economy. International journal of consumer studies, 46(3), 692-715. https://doi.org/10.1111/ijcs.12786

Dinda Ariandini, D., Soerjatisnanta, H., Firmansyah, A. A., & Adhan S., S. (2025). Kebijakan pemerintah dalam menjaga stabilitas harga barang kebutuhan pokok. Al-Zayn: Jurnal Ilmu Sosial & Hukum, 3(3), 1886–1894. https://doi.org/10.61104/alz.v3i3.1461

Doan Van, D. (2020). Money supply and inflation impact on economic growth. Journal of Financial Economic Policy, 12(1), 121-136. https://doi.org/10.1108/JFEP-10-2018-0152

Dunn, A., Grosse, S. D., & Zuvekas, S. H. (2018). Adjusting health expenditures for inflation: a review of measures for health services research in the United States. Health services research, 53(1), 175-196. https://doi.org/10.1111/1475-6773.12612

Emon, M. H. (2023). A systematic review of the causes and consequences of price hikes in Bangladesh. Review of Business and Economics Studies, 11(2), 49-58.

Fatimah, S., Zen, N. H., & Fitrisia, A. (2025). Literatur review dan metodologi ilmu pengetahuan khusus. Innovative: Journal of Social Science Research, 5(1), 41–48. https://doi.org/10.31004/innovative.v5i1

Ferreira, F. H., Chen, S., Dabalen, A., Dikhanov, Y., Hamadeh, N., Jolliffe, D., ... & Yoshida, N. (2016). A global count of the extreme poor in 2012: data issues, methodology and initial results. The Journal of Economic Inequality, 14(2), 141-172. https://doi.org/10.1007/s10888-016-9326-6

Greenacre, L., & Akbar, S. (2019). The impact of payment method on shopping behaviour among low income consumers. Journal of Retailing and Consumer Services, 47, 87-93. https://doi.org/10.1016/j.jretconser.2018.11.004

Hamadeh, N., Mouyelo-Katoula, M., Konijn, P., & Koechlin, F. (2017). Purchasing power parities of currencies and real expenditures from the international comparison program: recent results and uses. Social Indicators Research, 131(1), 23-42. https://doi.org/10.1007/s11205-015-1215-z

Hawkes, C., Smith, T. G., Jewell, J., Wardle, J., Hammond, R. A., Friel, S., ... & Kain, J. (2015). Smart food policies for obesity prevention. The lancet, 385(9985), 2410-2421.

Headey, D. D., & Martin, W. J. (2016). The impact of food prices on poverty and food security. Annual review of resource economics, 8(1), 329-351.

Herlambang, M. F., Pratiwi, R., Zain, N., & Hasibuan, R. R. A. (2026). Analisis dampak inflasi terhadap daya beli masyarakat. Jurnal Ilmiah Penelitian Mahasiswa, 4(2), 1–11. https://doi.org/10.61722/jipm.v4i2.2160

Loayza, N., & Pennings, S. M. (2020). Macroeconomic policy in the time of COVID-19: A primer for developing countries. World Bank Research and Policy Briefs, (147291).

Majumder, A., Ray, R., & Sinha, K. (2015). Estimating Purchasing Power Parities from Household Expenditure Data Using Complete Demand Systems with Application to Living Standards Comparison: I ndia and V ietnam. Review of income and wealth, 61(2), 302-328. https://doi.org/10.1111/roiw.12073

Min, H. (2022). Examining the impact of energy price volatility on commodity prices from energy supply chain perspectives. Energies, 15(21), 7957. https://doi.org/10.3390/en15217957

Mulyani, R. (2020). Inflasi dan cara mengatasinya dalam Islam. Lisyabab: Jurnal Studi Islam Dan Sosial, 1(2), 267-278. https://doi.org/10.58326/jurnallisyabab.v1i2.47

Novalina, A. (2019). Leading Indicator Stabilitas Ekonomi Di Negara Civi (China, India, Vietnam Dan Indonesia) Pendekatan Panel ARDL: Ade Novalina; Rusiadi. Jurnal Kajian Ekonomi dan Kebijakan Publik (JEpa), 4(1), 1-12.

Nurhayati, N., Purba, J. H. V., Entaresmen, R. A., Wahyuningsih, M., Lufti, M. Y., Hariyanti, D., ... & Harmaini, H. (2025). Perekonomian Indonesia: Pengantar dan Isu Kontemporer berbagai Sektor dalam Pertumbuhan Pembangunan Ekonomi di Indonesia. PT. Star Digital Publishing, Yogyakarta-Indonesia.

Oyadeyi, O., Ukoli, K., Chandiramani, A., Rosas, J., Luo, J., & Oyadeyi, O. A. (2024). The cost of living crisis in Nigeria: the impact of food and commodity prices on household purchasing power and their implications for economic wellbeing. Available at SSRN 4866006. https://dx.doi.org/10.2139/ssrn.4866006

Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. Jama, 319(10), 1024-1039.

Priyatna, H. N., & Suryadi, I. (2025). Facing Global Inflation: Economic Strategies to Strengthen People's Purchasing Power. MSJ: Majority Science Journal, 3(1), 73-81. https://doi.org/10.61942/msj.v3i1.312

Rizani, A., Norrahman, R. A., Harsono, I., Yahya, A. S., & Syifa, D. M. (2023). Efek inflasi terhadap daya beli masyarakat pada tinjauan ekonomi makro. Journal of International Multidisciplinary Research, 1(2), 344–358. https://doi.org/10.62504/jw0gee05

Rozikin, K., Nashrullah, N., & Anam, S. (2026). Teknik pengumpulan data penelitian dan penyusunan instrumen penelitian kualitatif. Pediaqu: Jurnal Pendidikan Sosial dan Humaniora, 5(2), 1612–1629. https://doi.org/10.35931/pediaqu.v5i2

Sartika, U. D., Siddik, S. A., & Choiriyah, C. (2019). Pengaruh inflasi, suku bunga, nilai tukar, dan produk domestik bruto terhadap nilai perusahaan. Jurnal ilmu manajemen, 8(2), 75-89. https://doi.org/10.32502/jimn.v8i2.1821

Shimeles, A., & Woldemichael, A. (2013). Rising food prices and household welfare in Ethiopia: evidence from micro data. African Development Bank Group, Working Paper Series, (182). https://dx.doi.org/10.2139/ssrn.2462602

Tremblay, N. (2026). The Impact of Inflation on Household Consumption: An Econometric Analysis from Emerging Markets. OTS Canadian Journal, 5(2). https://doi.org/10.58840/3069ys04

Utomo, F. W. (2013). Pengaruh Inflasi dan Upah Terhadap Pengangguran Di Indonesia Periode Tahun 1980-2010. Jurnal Ilmiah Mahasiswa FEB, 1(2).

Warkawani, C. M., Chrispur, N., & Widiawati, D. (2020). Pengaruh Jumlah Uang Beredar dan Tingkat Inflasi Terhadap Produk Domestik Bruto (PDB) di Indonesia Tahun 2008-2017. Journal of Regional Economics Indonesia, 1(1), 14-32. https://doi.org/10.26905/jrei.v1i1.4759

Younsi, M., & Nafla, A. (2019). Financial stability, monetary policy, and economic growth: Panel data evidence from developed and developing countries. Journal of the Knowledge Economy, 10(1), 238-260. https://doi.org/10.1007/s13132-017-0453-5

Zhu, Y., Zheng, Y., & Ren, Z. (2024). Household welfare loss from energy price crisis: Evidence from China. Energy Economics, 138, 107836. https://doi.org/10.1016/j.eneco.2024.107836