The Influence of Domestic Economic Factors on Inflation in Indonesia

Inflation is a monetary and structural
phenomenon in the Indonesian economy. The
objective of this research is to analyse the
indirect effect of Debt, Net Export and Interest
Rate on the Inflation through Exchange Rate :
and to analyse the direct effects of Debt, Net
export, Interest Rate, and exchange rate on the
inflation in Indonesia. The research uses
secondary data carried out from Bank Indonesia.
Statistics Center Board, DJPPR ( Directorate
General of Financing and Risk Management) of
the ministry of finance and from the Ministry of
Trade. Quarterly data of 1995-2020 are
employed as the data and analysed with path
analysis technique. Inderect result shows that
there is positive and significant effect of debt on
inflation through exchange rate, there is positive
and significant effect of net export on inflation
through exchange rate, and there is positive and
insignificant effect of interest rate on inflation
throught exchange rate. Direct result shows that
there is negative and insignificant effect of debt
on inflation, there is negative and insignificant
effect of net export on inflation, there is positive
and significant effect of interest rate on
inflation, and there is positive and significant
effect of exchange rate on inflation.