The Rise Of The Phenomenon Of Eating Savings In The Community Is Affected By The High Cost Of Living

JAKARTA - Director of the Center of Economics and Law Studies (Celios), Bhima Yudhistira, assessed that the phenomenon of eating savings in the community was influenced by expenditures that were not comparable to income among lower middle class people. Where they take savings for basic needs or living expenses can be in the form of food and transportation expenditure needs.

"There is a correlation between the increase in rice, chili and sugar prices to the low amount of savings," Bhima told VOI, Thursday, December 28.

Meanwhile, in terms of public income, it is hampered by the difficulty of finding a decent job. This phenomenon was actually seen before the pandemic from low core inflation.

Then after the pandemic, it turned out that economic pressure increased so that the increase in basic needs with monthly income received by the community was not directly proportional.

In addition, Bhima conveyed that the tax policy with an increase in the VAT rate of 11 percent was enough to affect the purchasing power of the middle class.

"If you want to calibrate, then the VAT is lowered, don't increase it to 12 percent. Then the tax incentives need to focus on labor-intensive, not just chasing capital-intensive ones," he explained.

According to Bhima, the Provincial Minimum Wage (UMP) formulation needs to be reshuffled because the current UMP growth is not able to improve people's income. He also emphasized that it is not too late to prevent weakening household consumption.

Bhima projects that by 2024 people's deposits will grow slower. Although at the beginning of the year there will probably be little help from political money ahead of the election or dawn attacks but their nature is temporary.

Based on a survey by Bank Indonesia (BI) consumers, the average proportion of consumer income stored decreased from 15.7 percent in October 2023 to 15.4 percent in November 2023.

Then, the proportion of consumer income for consumption also decreased from 75.6 percent in October 2023 to 75.3 percent in November 2023.

Meanwhile, based on BPS data, core inflation in November 2023 was recorded at 0.12 percent month to month (mtm), an increase from inflation in the previous month of 0.08 percent (mtm). The realization of core inflation in November 2023 was contributed mainly by inflation in gold jewelery and sugar commodities.

Meanwhile, volatile food group inflation in November 2023 recorded 1.72 percent (mtm), higher than the previous month's inflation of 0.21 percent (mtm). The increase in volatile food inflation was contributed mainly by inflation in various commodities of chili, onions, and rice.

Then the administrative price group inflation in November 2023 was recorded at 0.08 percent (mtm), lower than inflation in the previous month which was 0.46 percent (mtm). This development was influenced by gasoline deflation due to non-subsidized fuel prices (BBM).