Imbalanced Hike in Food Prices and Wages May Raise Poverty Rate: Economist

TEMPO.CO, Jakarta - An economist from the Institute for Development of Economics and Finance (Indef), Aviliani, assessed that the government must create policies that could efficaciously control food prices, as the surge in prices always occurs particularly before Ramadan and Eid al-Fitr.

Moreover, the price escalation was not directly proportional to the increase in people's income.

“The hike in income is always much lower,” Aviliani said in an online public discussion on food price hikes ahead of the Islamic month of Ramadan on Tuesday, March 5.

She mentioned that the price of rice rose 18.41 percent year-on-year (yoy) in February 2024. Meanwhile, the month-to-month increase from February-March 2024 reached 6.35 percent. Statistics Indonesia (BPS) recorded that rice contributed 0.21 percent of the total 0.37 percent inflation on an mtm basis.

If the government failed to resolve the issue of rice prices, Aviliani added, new poor people could potentially emerge. “Middle-class people may be at risk of becoming poor, and those at risk may become poor,” she said.

Aviliani went on to say that efforts to stabilize the prices of basic necessities are not the responsibility of the central government alone, and that the regional government must also be involved in solving the problem.

“Food is one of the factors that can make people poor or not. Therefore, it must be redefined that the regional task is not only to end poverty but also to stabilize food prices,” she concluded.

RIRI RAHAYU

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