Analysis of the Impact of Basic Needs Price Increases on Per Capita Income in Indonesia: A Review from a Domestic Economy Perspective

Cost escalation of essential goods has an important effect on a country's per capita income. This research seeks to examine the impact of rising prices of basic necessities on per capita income in Indonesia, with a focus on the internal economic outlook. Utilization of panel data regression analysis techniques was used to assess the correlation between price spikes in essential goods and per capita income, while considering various additional economic and demographic variables. The findings of this investigation reveal that the surge in prices of essential goods has had a significant impact on per capita income in Indonesia. A decrease in purchasing power due to increased prices of essential goods can reduce the actual income of individuals and households, consequently affecting overall per capita income. This impact is particularly profound among households with limited income levels. Other elements such as inflation, economic expansion, and government strategy also contribute to determining the consequences of rising prices of essential goods on per capita income. Consequently, there is a need for appropriate policies to efficiently address rising prices of basic necessities, including measures to manage inflation, strengthen social safety nets, and improve economic efficiency. In short, rising prices of essential goods have major consequences for per capita income in Indonesia. Inclusive and enduring strategies are essential in designing economic policies that can overcome these obstacles, while taking into account the various external and internal factors that influence the intricacies of the domestic economy.