The Impact of the COVID-19 Pandemic on the Prices Volatility of the Main Foodstuffs in Indonesia

Agus Hermawan, Komalawati Komalawati, Cahyati Setiani, Joko Triastono, Miranti Dian Pertiwi, Forita Dyah Arianti and Indrie Ambarsari
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Agus Hermawan: Assessment Institute for Agricultural Technology Central Java
Komalawati Komalawati: Assessment Institute for Agricultural Technology Central Java
Cahyati Setiani: Assessment Institute for Agricultural Technology Central Java
Joko Triastono: Assessment Institute for Agricultural Technology Central Java
Miranti Dian Pertiwi: Assessment Institute for Agricultural Technology Central Java
Forita Dyah Arianti: Assessment Institute for Agricultural Technology Central Java
Indrie Ambarsari: Assessment Institute for Agricultural Technology Central Java

A chapter in Community Empowerment, Sustainable Cities, and Transformative Economies, 2022, pp 669-687 from Springer

Abstract: Abstract The coronavirus, originally an endemic in Wuhan Province, China, quickly spread throughout the world and turned into a pandemic. In Indonesia, COVID-19 was officially announced on March 2, 2020. Several policies were taken to prevent the spread of the coronavirus, particularly in social distancing, self-isolation, and travel restrictions. This policy has reduced employment in all sectors of the economy and the loss of many jobs. The study was conducted to determine the impact of COVID-19 on the volatility of the leading food commodities that strongly trigger inflation (rice, fresh chicken meat, beef, eggs, onions, garlic, curly red chillies, red chillies, cooking oil, and sugar). The analysis was carried out by dividing the daily food price data into two periods: before (July 31, 2017 – March 1, 2020) and during (March 2, 2020 – October 14, 2020) COVID-19. Price volatility was analysed using the ARCH/GARCH Model. Analysis was also carried out by correlating food price movements with the progress of COVID-19 cases. The results show that most food prices tend to be stable after COVID-19 cases except for chicken, meat and eggs. A significant correlation was also found between the price movements with the COVID-19 cases. The results indicated that the impact of COVID-19 on food price volatility related to the intrinsic character or the nature of foods, the benefits of the foods to health, and government protection policies for these food staples. In general, the government must guarantee those food staples’ movement, and thus, their distribution would not be disrupted. Social security policies are still essential to maintain purchasing power, access the poor to food, and prevent a decline in the performance of the agricultural sector.

Keywords: COVID-19; ARCH/GARCH; Volatility; Food prices; Indonesia (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/978-981-16-5260-8_37

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