Dean Of UI Shows How To Overcome Inflation

Illustration. (Photo: Doc. Antara)

JAKARTA - The Dean of the Faculty of Economics, University of Indonesia (FEB UI) Teguh Dartanto said to anticipate high inflation can be done by providing compensation.

"The increase in the price of fuel oil (BBM) can usually increase inflation by 1.52 percent," said Teguh Dartanto at the UI Depok campus, West Java, quoted from Antara, Monday, September 19.

He said inflation would definitely increase poverty, but if various programs could be properly promoted, the impact of poverty could be minimized.

theoretically, he continued, people with low purchasing power must be reappointed so that welfare increases. The trick is to help them to have the same purchasing power as before.

"For example, when we have Rp. 10,000 we will get 10 for goods at a price of Rp. 100. If the price of goods increases to Rp. 200, we only get 5 items from the money," he said.

Therefore, he continued, in order to keep getting 10 items, we must get additional money. This is where the role of financial assistance from the government is. This concept is known as the competitive variant.

Competsating variant is the amount of additional money needed to restore the original level of individual utilities if the price of the item consumed increases or is no longer available. This assumes that the prices and availability of all other goods will not change.

The success or accuracy of the competitive variant depends on several things, namely accurate recipient data (database), appropriate amount of compensation, and timely provision of assistance.

Teguh predicts that the price increase will be felt in the next 3-4 months, so that compensation must be given quickly for at least three months with an amount of Rp. 100150 thousand. In addition, the government must also provide protection to affected MSMEs.