ISEB2012. – Conceptual Paper
Simply Inflation can be defined as rising prices in general and continuous
. This means an increase in theprice of one or two items alone cannot be called unless the rise in inflation that resulted in priceincreases in other goods (domino effect). While the opposite of inflation is called deflation.Several indicators are often used to measure the rate of inflation such as the Consumer Price Index(CPI)
. CPI change from time to time show the price movement of goods and services consumed by thepublic. Since July 2008, the package of goods and services in the CPI as an indicator has been done basedon Cost of Living Survey (SBH) in 2007 conducted by the Central Statistics Agency (BPS). Then, the BPSwill monitor the price movement of goods and services on a monthly basis in several cities, thetraditional and the modern market for some types of goods / services in each city.Other inflation indicators used by international best practice include:1.
Wholesale Price Index (WPI). WPI is the price of a commodity transaction that occurs betweenthe seller and wholesaler first with buyer / trader the next big market in large numbers on thefirst of a commodity.2.
Gross Domestic Product Deflator (GDP). Describe the measurement of the price level of GDPfinal goods and services produced within a country. Generated by dividing the GDP deflator of GDP based on nominal prices to GDP at constant prices.According to Central Bureau of Statistics, inflation as measured by the CPI in Indonesia are grouped into7 groups of expenditure (based on the Classification of individual consumption by purpose - COICOP),namely: Food Ingredients Group, The Food, Beverage, and Tobacco, Housing Group, the Group clothing,Group Health, Education and Sports Group and the last group of Transport and Communications.Besides COICOP groupings based on the way, the current BPS also publishes other inflation basedgrouping called disaggregation of inflation. Disaggregation of inflation is taken to produce an inflationaryindicator that further illustrates the influence of fundamental factors.In Indonesia, in practice disagegasi CPI inflation is grouped into several types based on the cause:1.
Core inflation, the inflation component is likely to persist or persistent (persistent component)in the movement of inflation and are influenced by fundamental factors, such as:
The external environment: the exchange rate, international commodity prices, inflationin trading partner
Inflation expectations of traders and consumers2.
Non-core inflation, the inflation component of high volatility tends to be influenced by factorsother than fundamentals. Non-core inflation components consist of:
Volatile components of inflation (Volatile Food):Inflation that is predominantly influenced by shocks (shocks) in foodstuffs such asharvesting, natural disturbance, or developmental factor prices of food commodities fordomestic and international food commodity prices.
Inflation component of the government regulated price (Administered Prices):Inflation is predominantly influenced by shocks (shocks) in the form of governmentpricing policies, such as the price of subsidized fuel, electricity rates, transport rates, etc.
See Pratama, Rahardi. 2001:203. Ekonomi Makro. Jakarta: Salemba Empat, Universitas Indonesia.
As a comparison can be seen also how to measure the rate of inflation:
Nopirin. 2000. Ekonomi Moneter.Yogyakarta: BPFE.