Rising global inflation has a significant impact on the Indonesian economy. Factors such as soaring prices of goods, increasing costs of living, and the impact on people’s purchasing power are major concerns. In a global context, inflation is often triggered by energy crises, supply disruptions and geopolitical tensions, which directly or indirectly affect Indonesia’s domestic economy. One of the most obvious impacts of global inflation is the increase in commodity prices. Indonesia, as a country that is highly dependent on natural resource exports, experiences price fluctuations that affect state income. The increase in oil, gas and food commodity prices globally increases government income from the export sector, but also has an impact on domestic production costs. On the other hand, global inflation can cause increases in prices of consumer goods. With increasing raw material costs, domestic producers are forced to increase the selling prices of their products. This has the potential to reduce people’s purchasing power, which has a direct impact on household consumption, an important component of domestic productivity. Over time, if purchasing power continues to decline, Indonesia’s economic growth could be hampered. In fact, increasing global inflation also complicates the government’s monetary and fiscal policies. Bank Indonesia, to stabilize domestic inflation, may raise the benchmark interest rate. However, this move could slow down economic growth, as borrowing costs become expensive, affecting investment and public spending. Labor market conditions are also affected, where inflation can reduce the creation of new jobs. Economic uncertainty caused by global inflation can create fear among entrepreneurs about expanding. When market sentiment declines, foreign direct investment also tends to decrease, which can slow down Indonesia’s economic growth. Inflation on a global scale also triggers the need for economic diversification. Indonesia needs to look for new markets and reduce dependence on volatile commodities. Investment in the digital, technology and manufacturing industry sectors can be a strategic alternative to ensure more stable and sustainable growth. Apart from that, food security is an issue that must be considered. When global inflation increases food costs, the government is expected to respond by maximizing domestic food production. By strengthening agricultural and logistics systems, it is hoped that the influence of global inflation can be minimized. In facing the impact of global inflation, collaboration between government, the private sector and society is very important. Breakthrough innovation in technology and resource management can help increase efficiency and productivity. Apart from that, poverty alleviation and welfare improvement programs must be a priority so that society is more resilient to inflationary shocks. Overall, although global inflation brings challenges, with the right and proactive strategy, Indonesia can move towards more sustainable growth. Adaptation to change and long-term planning will be key to successfully dealing with the impact of inflation.
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