Food Price Inflation, GNPIP Policy, and Economics Growth in Indonesia

This study examines the impact of food inflation and the role of the National Food Inflation Control Movement (GNPIP) on regional economic growth measured through Gross Domestic Product (GDP) per capita, using the 2018–2023–time panel data with cross-section of 34 provinces in Indonesia. Using cross-regional panel data analysis, the results show that food inflation in general has a significant negative impact on GRDP per capita, with a delay in one period, especially through a decrease in household purchasing power, especially in low -income groups. Conversely, rice inflation shows a significant and delayed positive effect on economic growth, driven by revenue redistribution to rural producers and multiplier effects in the agricultural economy. However, corn and soybean inflation does not show a significant impact, which is caused by the limited role of these commodities in direct consumption, weak economic linkages, import dependence, and low supply elasticity. The GNPIP policy has proven to have a positive and significant influence on GRDP per capita, confirms its multiple roles in maintaining price stability while encouraging regional economic growth through increasing consumption and investment activities. Nevertheless, GNPIP is unable to moderate the relationship between rice inflation and economic growth, indicating its limited capacity in reducing the shocks of certain commodity prices. One of the important mechanisms of GNPIP is announcement effect, which helps prevent panic buying by giving positive signals to the public about food availability and price stability. This study confirms that GNPIP has a strategic role in maintaining economic stability by averting panic buying and bolstering the advancement of the domestic economy.