LITERATURE REVIEW: THE EFFECT OF INFLATION ON THE PROFITABILITY OF MSMEs IN WEST JAVA, INDONESIA (2019-2024)
Keywords:
inflation, MSMEs, profitability, west java, economic challengesAbstract
This study provides a comprehensive analysis of the sectoral impact of inflation on Micro, Small, and Medium Enterprise (MSME) profitability in West Java, Indonesia, during the 2019-2024 period. As MSMEs constitute the backbone of West Java's economy, contributing significantly to regional GDP and employment, understanding their vulnerability to macroeconomic fluctuations is crucial. This research addresses a critical gap in the existing literature by moving beyond generalized approaches to examine the nuanced, sector-specific effects of inflationary pressures. Employing a systematic narrative literature review methodology, this study synthesizes empirical evidence from diverse secondary sources, including statistical reports from BPS and Bank Indonesia, as well as scholarly publications. The analysis reveals pronounced sectoral heterogeneity: food-based MSMEs experience substantial profit margin compression due to input price volatility, while creative industry enterprises demonstrate remarkable resilience through export orientation and product diversification strategies. Service-oriented MSMEs face moderate challenges associated with diminished local purchasing power. These findings underscore the necessity for differentiated policy approaches that acknowledge sectoral characteristics. The study concludes that effective economic planning requires tailored interventions rather than one-sizefits-all solutions, recommending targeted support mechanisms such as input subsidies for agricultural MSMEs and export facilitation programs for creative industries to enhance sector- specific resilience against inflationary challenges.
References
Alhassan, I., & Islam, K. M. A. (2021). Liquidity management and financial performance of listed oil and gas companies in Nigeria. International Journal of Accounting & Finance Review, 8(1), 15–25. https://doi.org/10.46281/ijafr.v8i1.1364
Bahtiar, H., Rizal, L., Falentina, Y., Husna, M., & Selvi, G. (2025). Digital transformation towards sustainability: Challenges and opportunities for Indonesian MSMEs. Jurnal Ekonomi dan Bisnis, 28(1), 131–150.
Bank Indonesia. (2023). Akselerasi transformasi digital Indonesia. CNN Indonesia.
BPS-Statistics Indonesia Jawa Barat Province. (2023). Provinsi Jawa Barat dalam angka 2023. BPS-Statistics of Jawa Barat Province.
Dikara Raihan. (2024). Proposed improvement plan to improve small and medium enterprise financial performance: A case study of Orbit. Jurnal Ekonomi Akuntansi dan Manajemen, (August), 1–111.
Kasim, S., Hamzah, M. N., Kadir, A., & Abdulahh, M. W. (2024). Resilience of micro, small, and medium enterprises based on Islamic entrepreneurship. IQTISHODUNA: Jurnal Ekonomi Islam, 13(1), 211–232. https://doi.org/10.54471/iqtishoduna.v13i1.2333
Khairunnisa, H., Alfaza, A. R., Fadhillah, U., & ... (2021). Analisis perkembangan Batik Trusmi sebagai ikon kearifan lokal Cirebon. Jurnal Perjalanan Wisata, Destinasi dan Hospitalitas, 4(1), 1–9.
Munandar, A., Mistar, M., Rimawan, M., & Huda, N. (2020). The influence of inflation and interest rates on working capital credit of micro, small and medium enterprises. Atlantis Press, 465(2), 334–337. https://doi.org/10.2991/assehr.k.200827.084
Nurwiati, W., Suhardi, D., & Adzimatinur, F. (2023). Pengaruh leverage keuangan, leverage operasional, dan inflasi terhadap profitabilitas. Jurnal Ekonomi Akuntansi dan Manajemen, 3(2), 633–651.
Priari, E. P., & Wulandari, A. (2019). Ratio analysis to measuring financial performance of PT. Indosat Tbk. International Journal of Integrated Education, Engineering and Business (IJIEEB), 2(2), 105–114.
Putra, W. P., Hayati, F. A., Andriani, J., & Putra, I. H. (2023). Analysis of the impact of digital technology on MSME business growth in Bandung City: Case study on the use of e-commerce digital marketing, and online management system. West Science Journal Economic and Entrepreneurship, 1(12), 427–436. https://doi.org/10.58812/wsjee.v1i12.444
Putri Vera Ridia Insani, Marliana Nissa Ayu, Fausan, H., & Nurshadiqah, S. (2023). The effects of inflation and joblessness on regional GDP in seven West Javan cities from 2014 to 2021. Syari’ah Economics, 7(2), 105–113.
Saputera, D., Ichsani, S., Wijaya, J. H., & Hendiarto, R. S. (2021). Development of small and medium micro business: A geographical outlook on West Java Province, Indonesia. Review of International Geographical Education Online, 11(1), 712–719. https://doi.org/10.33403/rigeo.800610
Saputra, A. E., Zulpahmi, Z., & Fitriyanto, A. (2023). The influence of MSMEs, inflation, and sharia bank finance on economic growth. Jurnal Ilmiah Ekonomi Islam, 9(2), 2575–2590. https://doi.org/10.29040/jiei.v9i2.8552
Saragih, H., & Karyati, C. M. (2023). The development of West Java MSMEs as a form of economic defense: An analysis with forecasting methods. West Science Business and Management, 1(5), 371–385. https://doi.org/10.58812/wsbm.v1i05.493
Suhardi, D., Gunawan, W. H., & Watulandi, M. (2025). The impact of fintech, online marketing, and financial inclusion the development of MSME enterprises in Kuningan Regency, West Java. International Journal of Economics, Business and Accounting Research (IJEBAR), 9(1), 143–149.
Supandi, A., Astuti, P., & Murti, W. (2021). Determinants of micro, small and medium enterprise in West Java Province. European Union Digital Library, 1(2019), 1–11. https://doi.org/10.4108/eai.30-10-2021.2315826
Syafitri, A. A., Kusdinar, Y. H., & Sunarny, R. (2024). Inflasi dan daya beli terhadap perubahan harga, elastisitas permintaan dan perilaku konsumsi: Studi UMKM di Kota Bandung. Jurnal Ilmiah Nasional Bidang Ilmu Teknik, 12(2), 2337–3636.
Tambunan, T. T. (2015). Impacts of energy subsidy reform on micro, small and medium-sized enterprises (MSMEs) and their adjustment strategies: A story from Indonesia. International Journal of Small and Medium Enterprises Business Sustainability, 1(3), 1–64.
Zulkarnain Muhhamad, Mukaramah, Yolanda Cindy, Iqbal, C. T., & Natalia, B. B. C. W. (2022). Pengaruh suku bunga, pendapatan per kapita, inflasi dan permintaan kredit UMKM di Indonesia. Journal Economic and Strategy (JES), 5(1), 1–10.
