Food Inflation and Poverty in Indonesia: How Regional Disparities Shape Economic Hardship

Misbahol YaqinNaufal Alfaraby Winandita

DOI 10.7160/aol.2026.180309
No 3/2026, September
pp. 123-135

Yaqin, M. and Winandita, N. A. (2026) "Food Inflation and Poverty in Indonesia: How Regional Disparities Shape Economic Hardship", AGRIS on-line Papers in Economics and Informatics, Vol. 18, No. 3, pp. 123-135. ISSN 1804-1930 DOI 10.7160/aol.2026.180309.

Abstract

We examine the impact of rising food prices on poverty in Indonesia by considering regional characteristics. Using panel data from 34 provinces in Indonesia from 2013 to 2024, we apply the Generalized Method of Moments (GMM) to estimate the relationship between food price inflation and poverty rates. We find that rising food prices significantly increase poverty levels. The results are consistent across models. The impact is more severe in rural areas compared to urban areas, indicating greater vulnerability of rural households to food price fluctuations. Moreover, we find that in Western Indonesia which are a more developed regions experiences a lower poverty impact from rising food prices compared to Eastern Indonesia. These findings highlight the need to stabilize food prices to support inclusive development. Strengthening regional food security, ensuring targeted funding, and implementing effective food subsidies are essential to mitigate the impact of food price inflation on low-income populations

Keywords

Food price inflation, poverty, rural poverty, food security

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