UNAIR NEWS – Problems caused by the Covid-19 pandemic are not over, yet entering this year’s Ramadan, people are worried about the soaring prices of some essential commodities, including the price of cooking oil, sugar, and fuel.

Furthermore, the public has also been suffocated by an increase in Value Added Tax (VAT) from 10 percent to 11 percent. It affects commodity prices in the market. For manufacturers, these rising prices will affect production results as raw material prices also soar.

Soaring prices do not only happen ahead of major holidays such as Eid al-Fitr, Eid al-Adha, and Christmas. It keeps happening until it forms an annual pattern.

Interviewed by UNAIR NEWS in his office, April 16, 2022, Universitas Airlangga economist, Dr Imron Mawardi SP MSi, said that this rising price phenomenon could be related to simple economic principles. Increased demand ahead of Eid, will have an impact on price increases. Furthermore, according to him, this year’s Ramadan leads to people’s euphoria because social restrictions have been implemented for the last two years.

“For this year, there is a pandemic recovery, plus Ukraine (Russian-Ukrainian conflict, -ed ), the impact is extraordinary,” said Imron.

According to him, when it can be anticipated properly, by increasing the supply of goods in the market, the rising price should not be repeated. However, for him, the pattern of increasing demand ahead of holidays is often exploited by irresponsible people. As a result, even though the government prepares an intervention, the issue continues.

“In my opinion, in April, I estimate inflation will be above 0.5 compared to the previous month’s inflation. Even if we look at the previous phenomenon, indeed, inflation in the month of Ramadan is higher than in the previous months,” he continued.

He also highlighted the soaring price of oil, both cooking oil and fuel. In his opinion, the increase in  Crude Palm Oil (CPO) price will increase the price of cooking oil. This increase will cause inflation called Cost-Push Inflation or inflation caused by increased production costs.

He is also worried about the increase in Pertamax fuel. According to him, the significant increase in Pertamax prices will make many Pertamax users switch to Pertalite, which is more affordable because of subsidies. It will certainly have an impact on increasing demand for Pertalite type fuel.

Nevertheless, he said that rising prices in the month of Ramadan are not always bad. It also indicates that the wheels of the economy are moving. He highlighted routines ahead of Eid, such as the provision of additional allowances to employees to the wealth distribution to the poor through zakat, infaq, and alms, which are massively intensified during Ramadan.

“When people have money from receiving alms, the demand for goods will automatically increase because they will spend the money. Likewise, the mustahiq (people who receive zakat, –ed ) who will spend the money,” said Vice Dean II of Faculty of Advanced Technology and Multidiscipline (FTMM) UNAIR.

In the end, he advised the community to set a priority scale and understand what their wants and needs are. According to him, wants are unlimited while needs are limited.

“So actually, if our basis (spending money, -ed ) is a necessity, then we will save money. It is also religious guidance,” he concluded (*)

Author: Afrizal Naufal Ghani

Editor: Nuri Hermawan