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Abstract

Food inflation may affect poverty through changes in household purchasing power, but its relationship with poverty may differ depending on the direction of inflation-rate changes and the dimension of poverty examined. This study examines the asymmetric effects of food inflation on poverty depth and poverty severity across Indonesian provinces. Using a quantitative explanatory approach, the study considers provincial panel data for the period 2013–2024. Poverty depth is measured by the Poverty Gap Index (P1), while poverty severity is measured by the Poverty Severity Index (P2). Positive and negative changes in food inflation are examined separately, with economic growth and the open unemployment rate included as control variables. Panel regression analysis and Wald tests are employed to assess the relationships and test for asymmetry. The reported results indicate that positive and negative changes in food inflation are positively and statistically significantly associated with poverty depth, with coefficients of 0.086 (p = 0.0058) and 0.029 (p = 0.0389), respectively. The Wald test indicates a statistically significant difference between these coefficients (p = 0.0423). For poverty severity, positive changes in food inflation exhibit a positive and statistically significant association (β = 0.031, p = 0.0100), whereas negative changes are not statistically significant (β = 0.009, p = 0.1342). The corresponding Wald test does not provide sufficient evidence of asymmetry (p = 0.1395). These findings highlight the importance of distinguishing between poverty depth and poverty severity when examining the relationship between food inflation and poverty. The study provides a framework for understanding how changes in food inflation may be associated with different dimensions of poverty and offers considerations for food-price stabilization and poverty alleviation policies in Indonesia.

Keywords

food inflation poverty depth poverty severity asymmetric effects panel data Indonesia

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Sappewali, B., Nusa, B. S., & Indar, S. H. (2026). Asymmetric Effects of Food Inflation on Poverty Depth and Poverty Severity in Indonesia: A Provincial Panel Data Analysis. Economics and Digital Business Review, 7(2), 1042–1056. Retrieved from https://ojs.vifada.id/index.php/ecotal/article/view/4231
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