Director of Economics at the Center of Economic and Law Studies (Celios) Nailul Huda assesses that the current deflation is mostly caused by weakening people’s purchasing power due to inappropriate government policies.
Likewise, core inflation in September 2024 was recorded at 0.16%, or down from 0.20% in August 2024. This shows a decline in people’s purchasing power.
“If we link it with other supporting data, it also shows that people’s ability is decreasing. Savings, for example, people’s ability to save is now weakening, in fact now they are eating up their savings,” said Huda.
Also read: The government should not be busy entertaining itself in the midst of deflation
Therefore, Huda asked the government to be wiser in making policies, so as not to have a negative impact on household consumption.
“The plan to increase the VAT rate next year must be cancelled. Pertalite restrictions must also be carried out carefully by looking at the element of justice for subsidy recipients,” he stressed.
In the capital city of the archipelago (IKN), East Kalimantan, President Joko Widodo (Jokowi) emphasized that deflation and inflation should be controlled together so as not to harm all parties.
Also read: Economists Say Domestic Factors Cause Indonesia to Experience Consecutive Deflation
“Whatever is called deflation or inflation, both must be controlled so that prices are stable, not harming producers, whether they be farmers, fishermen, MSMEs, manufacturers, but also from the consumer side so that prices don’t rise,” said the President.
He asked that the causes of the deflation data must be further checked, whether it was due to a decrease in the price of goods or a decrease in people’s purchasing power.
“Just check carefully, deflation is due to a decrease in the prices of goods, because the supply is good, because distribution is good, because there are no obstacles in transportation, or because purchasing power is reduced. Control is what is needed, balance is what is needed,” said the President. (Z-11)
#Consecutive #deflation #government #wrong #policies
Deflation and its Impact on the Economy: An Analysis of Recent Trends
As a news writer, I recently came across an article discussing the current state of deflation and its potential causes. According to Nailul Huda, Director of Economics at the Center of Economic and Law Studies (Celios), the current deflation is largely attributed to the weakening of people’s purchasing power due to inappropriate government policies. But what exactly is deflation, and how does it impact the economy?
Understanding Deflation
Deflation is defined as a decrease in the price of goods and services over time, resulting in an increase in the purchasing power of a currency [1[1[1[1]. It is a real decrease in prices, as opposed to disinflation, which refers to a slowdown in inflation rates [2[2[2[2]. In simpler terms, deflation is when the prices of goods and services fall, allowing consumers to afford more things with the same amount of money [3[3[3[3].
The Current State of Deflation
The article highlights that core inflation in September 2024 was recorded at 0.16%, a decline from 0.20% in August 2024. This indicates a trend of decreasing prices, which is consistent with deflation. However, the causes of deflation can be complex and multifaceted. In this case, Nailul Huda attributes the current deflation to weakening people’s purchasing power due to government policies.
Impact on the Economy
Deflation can have both positive and negative effects on the economy. On the one hand, decreasing prices can increase consumers’ purchasing power, allowing them to afford more goods and services. This can lead to increased economic activity and growth. On the other hand, deflation can also lead to decreased spending and investment, as consumers may delay purchases in anticipation of lower prices in the future.
Conclusion
deflation is a decrease in the price of goods and services over time, resulting in an increase in the purchasing power of a currency. The current state of deflation in the economy is likely caused by a combination of factors, including government policies. While deflation can have both positive and negative effects on the economy, it is essential to understand its underlying causes and effects to develop effective policies to address it. By analyzing the trends and causes of deflation, we can gain a deeper understanding of the complex interactions within the economy and develop strategies to promote sustainable growth and stability.
