Still large share of food expenditure
Still large share of food expenditure most people mean weight of food inflation to greater inflation. Moreover, the character of food products to the value of the elasticity of demand is low danpenawaran cause large fluctuations in food prices. Inflation and currency fluctuations may affect the market would then affect macroeconomic stability. Macroeconomic stability is a guarantee for investors to invest so as to create jobs and economic growth. Experience has shown the government to change the regime due to political problems in the market followed by food shortages and rising inflation. Accordingly, the relationship aspect of food prices and inflation is an important issue. monetary factors cause inflation is an increase in the money supply exceeds the increase in money demand, caused by government deficits, credit olehsistem development banks, and the balance of payments surplus due to oil boom and foreign aid, and factors caused by cost push inflation is rising prices The main commodities in the domestic market, such as fuel oil, rice, etc.. The phenomenon of food products on the demanding role of the government to domestic producers and consumers can be protected. The role is expected to accelerate the achievement of national development goals. In order to achieve the national development goals, necessary means, in this context is the stability of food prices which can be done through food price policy. one policy objective is to stabilize food prices food prices in order to reduce the uncertainty of farmers and ensure stable food prices for consumers and price stability at the macro level. The issue is whether government policy intervention in the form of food policy could lead to macroeconomic stability or otherwise is precisely the cause of macroeconomic instability. Because pricing policy requires funding, which in the past sourced from fresh money (fresh money) from Bank Indonesia, thus affecting the money supply or through government spending. For Indonesia as an agriculture-based country with a large population, the phenomenon must be addressed and anticipated. In theoretical concepts, food price policies to control macro-economic stability. Conversely, if the food price policies affect the money supply and government spending, without control can also lead to macroeconomic instability.