• Paresh Kumar Narayan Deakin University
Keywords: Consumer Price Index, Cities, Price discovery, Bank Indonesia


Using the Consumer Price Index (CPI) data of 82 Indonesian cities, we propose thehypothesis of heterogeneity in the cities’ contribution to the aggregate IndonesianCPI. Using a price discovery model fitted to monthly data, we discover that (1) of the23 cities in the province of Sumatera, five contribute 44% and nine contribute 66.7%to price changes, and (2) of the 26 cities in Java, four alone contribute 41.6% to pricechanges. Even in smaller provinces, such as Bali and Nusa Tenggara, one city alonedominates the change in aggregate CPI. From these results, we draw implications formaintaining price stability.


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How to Cite
Narayan, P. (2019). UNDERSTANDING INDONESIA’S CITY-LEVEL CONSUMER PRICE FORMATION: IMPLICATIONS FOR PRICE STABILITY. Buletin Ekonomi Moneter Dan Perbankan, 22(4), 405 - 422. https://doi.org/10.21098/bemp.v22i4.1239