Impact of Inflation in Indonesia

Impact of Inflation in Indonesia

Inflation is a process of rising prices in general and continuous which can be caused by various factors, among others, increased consumption, excess liquidity in the market that triggered the consumption or even speculation, as well as due to noncurrent of  distribution of goods.

Why  inflation is happening in Indonesia  ? , Maybe this question will not be ending up at any time. In fact inflation in Indonesia is never decreased. The basic principle behind inflation is that by increasing the money supply, as well as the relative price of goods and services.

Inflation is contributed from two things, general inflation and asset inflation. In general inflation is contributed from the food sector, oil and food. For asset inflation is mainly due to property and equities. Two sectors that must be aware of this inflation by countries in Asia, especially Indonesia. Therefore, inflation in Indonesia is quite high.

Other causes of inflation among the first to cause more affected than the state's role in monetary policy, while the latter are more affected because of the role of the state in which the policy executor in this case held by the Government as fiscal (taxes, fees, incentives, disincentives ), infrastructure development policies, etc.

Indonesia Inflation can cause people are reluctant to save because the value of the currency goes down. Although savings earn interest, but if the inflation rate on the interest, value for money is still declining. If people are reluctant to save money, businesses and the investment will be difficult to develop. Due to growing business needs of the bank's funds earned from savings. Other inflationary impact that price of goods and services go up, values ​​and beliefs about money going down or reduced, Raises Speculation, many development projects stalled or abandoned, reduced public saving awareness.