THE IMPACT OF UNEMPLOYMENT RATE, INTEREST RATE, EXCHANGE RATE AND GDP TOWARDS INFLATION RATE IN INDONESIA DURING PERIOD OF 2006-2015

Abstract

This research attempts to analyze the impact of Unemployment rate, Interest rate, Exchange rate and GDP towards Inflation rate in Indonesia in the period of 2006-2015. In this research, the analytical method used is quantitative method. In addition, the data collection method used is secondary data by direct approach to Indonesia Bureau of Statistic and Bank of Indonesia’s website with sample size of 200 data, 40 of each variable. The data obtained are analyzed in the form of quantitative analysis and process it with multiple regression analysis to analyze the data collected source that was provided by Indonesia Statistic Bureau and Bank of Indonesia. This research also shows the normal distribution of data, no multicollinearity problem (VIF between 1 and 10), randomly spread heteroscedasticity and 0.902 autocorrelation value. The results of this research show that there is significant impact of Unemployment rate and Interest rate on Inflation. The biggest impact of inflation is the interest rate with the significant value of 0.000. The result of this research also show that unemployment rate and exchange rate have a negative correlation towards inflation rate and it happens to be positive correlation by the variable of interest rate and gross domestic product on inflation rate.