ANALYSIS OF THE INFLUENCE OF FOOD INFLATION ON HOUSEHOLD PURCHASING POWER IN INDONESIA

Abstract

This study aims to analyze the influence of food inflation, real per capita income, and open unemployment rate on household purchasing power in Indonesia during the 2019–2024 period. Post-pandemic economic developments show that there is pressure on food prices, changes in people's income levels, and the dynamics of employment conditions that have an impact on household consumption ability. This study uses a quantitative approach with a panel data regression method processed using EViews 13 software. The selection of the best model was done through the Chow test, the Hausman test, and the Lagrange Multiplier test, with the final results showing that the most suitable model was the Random Effect Model (REM). The results of the study show that simultaneously food inflation, real income per capita, and open unemployment rate have a significant effect on household purchasing power. Partially, food inflation and the open unemployment rate have a negative effect, while real income per capita has a positive effect on household purchasing power. These findings affirm the importance of food price stability, increasing real income, and expanding job opportunities in maintaining purchasing power and people's welfare.