Determinant of food inflation : the case of Indonesia

Deskripsi

In this paper, we investigate the determinants of food inflation in Indonesia. Using quarterly data (2008:Q1 to 2017:Q4) and a GMM estimator, we show that backward looking and forward-looking expectations have a strong impact on food inflation Additionally, we show that the determinants of general food price inflation, such as food production, agriculture sector output, infrastructure, food import, agriculture sector credit, demand level (M1/consumption), and seasonal event (Eid Mubarak), are highly significant. Backward-looking and forward-looking expectations, domestic oil price, and level of demand have contributed to high food price while factors relating to general food price inflation have reduced food price.