CIPS Asks Government To Beware Of Declining Public Purchasing Power

The increase in the prices of a number of commodity goods resulted in a decline in people's purchasing power. (photo: doc. between)

JAKARTA - The increase in the price of a number of food commodities that has been going on since the beginning of 2022 is certain to have an effect on people's purchasing power. This was conveyed in the Research Center for Indonesian Policy Studies (CIPS).

“Price stability is no longer the only thing that determines people's affordability of food commodities. The government needs to pay attention to the declining purchasing power due to the COVID-19 pandemic," said CIPS Head of Research, Felippa Ann Amanta, in a written statement to Antara in Jakarta, Sunday, May 1.

The release of the Central Statistics Agency (BPS) shows that the poverty rate in September 2021 showed an improvement with a decline of 9.71 percent after the previous year in September 2020 reaching 10.19 percent.

However, this positive achievement has the potential to decline due to the current high price of food commodities. Food is a significant value component in household consumption, especially for low-income people, which can reach 50 percent.

The Household Monthly Index (Bu RT) from CIPS shows that cooking oil prices in Jakarta in March rose 32.18 percent to Rp. 18,505 from Rp. 14,000 per liter in February, or up 39.69 percent from Rp. 13,247 per liter compared to March 2021.

Recently, the government has also imposed a ban on exports of Crude Palm Oil (CPO) and its derivative products, including cooking oil, after previously imposing an increase in the amount of Domestic Market Obligation (DMO), Domestic Price Obligation (DPO) and Highest Retail Price (HET).

Beef prices have also increased since the beginning of the year. In March 2022, it rose 9.27 percent from February to Rp. 153,700 per kg, up 2.28 percent from the same period last year. Felippa explained that the price increase was related to the increase in world beef prices, the increase in distribution costs, and the increase in demand ahead of Ramadan.

"Because Indonesia's beef supply is still dominated by imports, which is 30 percent based on data from the Ministry of Agriculture in 2020, the increase in international beef prices will also have an impact on increasing domestic prices," said Felippa.

Based on BPS data, Indonesia's beef imports in 2020 are dominated by Australia (47 percent), India (34.18 percent), the United States (8.74 percent), New Zealand (6.46 percent), and others (3.62 percent). ).

In the long term, according to Felippa, this can affect nutritional consumption. People tend to choose filling food at a cheaper price, but not necessarily sufficient for the nutritional needs of the body.

“Trading processes and procedures need to be increased in efficiency so that they do not take up money and time. In addition, trade policies must be accompanied by agricultural policies that focus on increasing the competitiveness of domestic producers. Domestic factors that cause high prices must be addressed through policies such as increased research and development, access to cheaper inputs, and infrastructure improvements,” he added.

Felippa said that efforts to increase the competitiveness of agricultural products are needed to open up the market. One of the things that can be done is by consistent efforts to create and maintain a business climate for investment and business competition in Indonesia.

Modernization and technology transfer can help increase the efficiency of farmers' production processes. Inefficient production processes make it difficult for local agricultural products to compete with imported products created through an efficient production process so that the quality is better and the price is cheaper.