Assessing the asymmetric impact of inflation pressure on farmers welfare in West Kalimantan, Indonesia

Abstract The study aims to investigate the impact of inflationary pressure on the welfare of farmers in West Kalimantan Province. To explore the potential asymmetric effects of inflation on farmers’ welfare in the short and long term, this study employed the nonlinear autoregressive distributed lag (NARDL) model. This study utilized monthly time series data from January 2020 to May 2024. The research results show the positive asymmetric relationship between the inflation rate and farmers’ welfare in the short term, characterized by an increase in inflation being directly responded to with a significant decline in welfare, especially for horticultural and plantation farmers compared to food farmers. On the other hand, a decrease in inflation only has a negligible impact on improving welfare for food and horticultural farmers. In the long term, negative asymmetry only exists in the relationship between inflation and the welfare of food crop farmers, as indicated by a decrease in the inflation rate, causing a significant decline in the welfare of food crop farmers. Finally, we concluded that the long-term impacts of inflationary pressure on the welfare of food crop farmers in West Kalimantan Province, Indonesia, are more significant and permanent than those that horticulture and plantation farmers experience.