Application of Principal Component Method Analysis in Identifying Factors that Influence the Occurrence of Inflation in the Bandung City in 2023

Abstract

This study discusses the city of Bandung which is one of the regions that has a fairly high contribution to the national inflation rate. Bandung City is the city with the third highest contribution to the formation of West Java inflation after Bogor City and Bekasi City. Based on BPS data (2009) the combined inflation that occurred in 3 cities in West Java Province (Bandung, Cirebon, Tasikmalaya) contributed 8.33% of national inflation. Because there are many factors behind inflation, research is conducted using principal component method to identify these factors. The principal component method is multivariate statistical analysis which can be used to reduce some of the original variables to new orthogonal variables while maintaining the total diversity of the original variables and correlating with others. The variables analyzed include Food, Beverages, and Tobacco (X1), Clothing and Footwear (X2), Housing, Water, Electricity, and Household Fuel (X3), Health (X4), Transportation (X5), Information, Communication, and Financial Services (X6), Food and Beverage / Restaurant Provision (X7), Personal Care and Other Services (X8). The results showed that there were 3 components formed from 8 variables analyzed, namely personal care factors and other services, health and housing, water, electricity and fuel.