Chronic Inflation Makes Grimace

Wounds due to the Covid-19 pandemic have not healed, society is now haunted by inflation. The effect of inflation is felt deeply for the community due to the economic conditions that are not yet fully normal.

The Central Statistics Agency for Jambi Province (08/01/2022) released a combined July year on year inflation rate of 8.55 percent, even more chronically, inflation in July 2022 was the highest inflation for the last 5 years.

What is the fate of economic growth?

We can observe inflation and economic growth from two sides, namely the effect of inflation itself on economic growth, or the effect of economic growth on inflation. If inflation increases it will hamper economic growth, however, it does not mean that inflation must be brought to zero because it can cause stagnation. Inflation that is still in the moderate category can provide a stimulus for producers to increase their production, in line with the law of demand and supply, if prices rise, supply will increase. High inflation rates are generally associated with warming economic conditions. Inflation occurs when the price level of goods and services rises, and it is inevitable that price increases have an impact on production activities. Generally, if inflation occurs, people will divert investment. The decrease in investment certainly causes a decrease in economic activity, in other words, it means that high inflation will affect the real income that investors get from their investment. In addition to the question of investment, the high inflation rate also causes a decrease in purchasing power. If public consumption declines, economic growth will also decline. This is because the decline in consumption is directly proportional to the decrease in demand for goods and services. A decrease in the production of goods and services will result in a decrease in economic growth. Inflation can threaten the pace of economic movement if not controlled immediately. The government and Bank Indonesia (BI) are expected to synergize in taking strategic policies to suppress the inflation rate so that the sustainability of the post-pandemic economic recovery is maintained. The government must be obliged to maintain the stability of the prices of goods and services so that the inflation rate can be controlled.

What should we do?

We, as household sector players, are certainly very affected by the high inflation rate. An out-of-control price increase causes us to wince. People who have a fixed income will certainly lose out due to inflation, because with the same amount of income they get fewer goods and services than usual. For this reason, the public is required to be smart so as not to be battered when inflation occurs.

Here are some steps that can be taken to minimize the impact of inflation.

First, increase income, the higher the inflation, the more money we need to buy something, as a result we have to look for additional income. There are various opportunities that we can take advantage of to increase our income, including by doing a side job or business, relying on productive goods for passive income, or investing in safe instruments.

Second, by managing expenses. Trying to reduce the portion of consumption financing is one way to reduce inflation. Shopping for goods and services is carried out as selectively as possible by making a priority scale for daily needs. Primary needs must take precedence without compromising secondary needs. In addition to saving on spending, spending arrangements can limit the money circulating in the market so that it is expected to reduce the rate of inflation.

The third step is that we should have a reserve fund. Saving is a very useful alternative when inflation occurs. This must be done well in advance, especially when our income is excessive or there is a pending expenditure item.

Noel Whittaker's principle "wealth is not about how much money we earn, but about how well we manage that money".

So, if we are able to manage income and expenditure, the "internal inflation" in the household will be controlled.

So that we will still smile sweetly and be optimistic when inflation is present. (Jambi/BPS data of Sarolangun Regency)