The Effect of Food Commodity Prices on Inflation in Tasikmalaya City

Abstract

Economic growth plays a vital role in enhancing social welfare, as it serves as a key driver for improving our standard of living. Over time, Tasikmalaya has developed into a hub of trade and economic activity in the East Priangan region. In Tasikmalaya City, inflation is often influenced by fluctuations in food commodity prices, food commodities have a significant role in determining the inflation rate, because they are the basic needs of the community. This study aims to examine the effect of food commodity prices on inflation in Tasikmalaya City and to determine the magnitude of this influence. The population and sample consist of monthly inflation rates from January 2018 to December 2022, along with the prices of selected food commodities namely rice, red chili, cayenne pepper, shallots, and garlic within the same period in Tasikmalaya City. The research method applied is the Vector Autoregressive (VAR) model using EViews 13 software. The findings reveal that among all variables, only the prices of garlic and shallots temporarily contributed to short-term inflation. In addition, rice had the strongest long-run effect and variance decomposition. Future research should consider including other strategic commodities such as sugar, chicken meat, eggs, and cooking oil, which also significantly contribute to food inflation, and adopt a broader scope of analysis.