Deflation Continues, Layoff Trend Increases

The Central Statistics Agency (BPS) reported a 0.12% month-to-month deflation in September 2024.

This is the fifth consecutive month of deflation since May 2024, as detailed in the graph.

Deflation is a general decrease in the prices of goods and services. According to the Acting Head of BPS, Amalia Adininggar Widyasanti, the recent deflation is due to a decrease in the prices of volatile commodities, especially food.

"The factor influencing deflation or price decreases is the supply side. The main contributor to deflation is the decrease in food prices," said Amalia, as reported by *Katadata.co.id* (1/10/2024).

"Horticultural products and livestock products experienced an increase in previous months, but are now declining as they return to stability," she continued.

According to Eka Budiyanti, a Legislative Analyst from the DPR RI Expert Agency's Parliamentary Analysis Center, deflation in the short term benefits consumers because prices become cheaper.

However, if it occurs in the long term, this can be a bad sign.

"Prolonged deflation can be a sign of a larger economic problem, such as a decrease in public purchasing power and a decrease in producer income," said Eka in the report *The Impact of Deflation on the Economy and Efforts to Overcome It* (August 2024).

"Another impact of deflation is an increase in unemployment due to companies reducing production and delaying investment," she continued.

Meanwhile, according to data from the Ministry of Manpower, along with the occurrence of deflation, the trend of layoffs (PHK) has tended to increase in recent months.

During the January-August 2024 period, around 46,200 workers were laid off nationally, with the number of layoffs per month as shown in the graph.

Cumulatively, the figure is up 24% compared to the January-August layoffs last year, which totaled 37,400 people.