The Effect of Inflation on Portfolio Performance and Investment Decisions: Conventional and Sharia Economic Perspectives in Indonesia

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Authors: Abdul Halik, Siti Mujanah, Muchammad Yudha Arifin
Cited by: 0

Abstract

This study aims to analyze the effect of inflation on investment portfolio performance and investment decisions in Indonesia. Inflation, as an important macroeconomic indicator, has a significant impact on investor behavior and investment decisions, especially in unstable economic conditions. The background of this study focuses on inflation fluctuations that have occurred in recent years in Indonesia, which have affected people's purchasing power and financial markets. This phenomenon has prompted the need for a deeper understanding of the impact of inflation on investment strategies, both by retail and institutional investors. The method used in this study is a descriptive analytical approach with quantitative analysis. The data used includes secondary data on inflation, interest rates, and stock market data from sources such as the Central Statistics Agency (BPS) and Bank Indonesia. The analysis techniques applied include linear regression to measure the effect of inflation on portfolio performance and investment decisions. This study also uses correlation analysis to understand the relationship between inflation and investment decisions, as well as how changes in inflation affect asset allocation in portfolios. The results show that inflation has a significant effect on investment portfolio performance, where high inflation causes a decline in the real value of investment returns and encourages investors to shift their funds to assets that are more resistant to inflation, such as gold, property, and commodity sector stocks. In addition, inflation also affects investment decisions, with investors being more cautious and choosing safer instruments during periods of high inflation. However, the effect of inflation on investment decisions is not always consistent, as it depends on investor characteristics and overall macroeconomic conditions. This study provides important insights for investors and policymakers to formulate investment strategies that are more adaptive to inflation fluctuations that can affect financial markets and investment decisions.

Fields of Study & Subjects

Financial Markets and Investment Strategies Financial Analysis and Corporate Governance Islamic Finance and Banking Studies

Publication details

Journal / source
At-Tasyri Jurnal Hukum dan Ekonomi Syariah
Volume
7
Issue
01
Pages
47–53
Publication date
6 January 2026