PERSISTENSI INFLASI REGIONAL DI SULAWESI SELATAN

The objective of this study is to measure the persistence of inflation level in South Sulawesi. In addition, this study intends to find out the source of inflation persistence. The analysis of the regional inflation behavior developed in this paper is explored to commodities level. Using quarterly data from Bank Indonesia from 2006.I to 2015.III, this study was conducted to make estimation by applying Univariate Autoregressive (AR) Model. The empirical result indicates that the level of inflation persistence in South Sulawesi is relatively high. This result indicates that inflation requires a long time to return to its natural value after shocks. The high degree of inflation persistence reflected by the length of the time period required to absorb of 50% of shocks occurred before returning to its natural value i.e. 13 months. Using the estimation results of Partial Adjustment Model (PAM), it shows that high inflation persistence in South Sulawesi mainly caused by inflation rate of groups of prepared food as proxy of volatile foods group and housing, water, electrical, gas and fuel as proxy of administered price group. Moreover, the existence of TIPD in South Sulawesi as an effort to coordinate monetary and regional fiscal policy in order to control the regional inflation, proved has a negative effect on regional inflation in South Sulawesi.