INFLATION IN ISLAMIC AND CONVENTIONAL ECONOMIC PERSPECTIVES

Abstract

Inflation is a monetary event that results in a decrease in the value of the currency against a certain item. These events cause disruption to the function of money, price distortions, damage output, undermine efficiency and productive investment, and cause social injustice. The method in writing this article is to use a literature study with a descriptive-analytic qualitative approach, namely research that focuses on tracing and analyzing written sources and other reading materials that are related to the themes discussed for further review and in-depth study. This study was conducted to examine inflation and how to overcome it in Islam. Inflation is a condition where there is an increase in prices in general and takes place continuously. Inflation is also a condition of a continuous decline in the value of the currency. In general, inflation is caused by: the large number of people's demand for an item, the increase in production costs, and the very high circulation of money in society. Meanwhile, according to Al-Maqrizi Taqyudin in Islamic economics, inflation is caused by natural inflation (naturally) and human errorr inflation (by humans). According to its nature, inflation is divided into creeping inflation (creeping inflation), medium inflation (galloping inflation), high inflation (hyper inflation). According to the cause of inflation, it is divided into Demand Pull Inflation and Cosh Push Inflation. According to origin, Inflation is divided into Inflation originating from within the country and from abroad. Meanwhile, according to public expectations, it is divided into Expected inflation and Unexpected inflation. In conventional economics the way to overcome inflation is to implement monetary policy, fiscal policy, non-monetary/non-fiscal policies. Whereas in Islam inflation is overcome by printing money with a low / minimal amount, implementing the Dues Idle Fund strategy, and implementing fiscal policy.