The problems under study were factors affecting the rate of inflation, i.e.: interest rate of Bank Indonesia Certificates (SBI), exchange rate, money supply, value of imports, and government budget deficit and the implications on investment, employment, poverty, and society welfare. The effective inflation control is a necessary precondition to encourage increasing of investment and employment and reducing of poverty in order to improve the society welfare. This study used explanatory method with hypothesis generating study approach to explain and test hypotheses about causal relationships in the model of society welfare to fulfill the goodness of fit. Data compiled in the form of semi-annual time-series during the period 1997- 2012. The research model is formulated recursively and analyzed using linear regression through ordinary least squares (OLS) method. The findings of research were: (1) The SBI rate, exchange rate, money supply, value of imports, and government budget deficits were important factors in controlling inflation. Inflation was not reactive on the changes in exchange rate and budget deficit. The global inflationary impact of rising export value also had a well-managed by government. The increasing of SBI rate had not been effective in limiting the investment loan that inflation increased. The inflation was most reactive on the change in the money supply due to the addition of the money supply was not in accordance with the needs of economic activity; (2) The inflation control policy to attract investment was appropriate, i.e. in case of demand pull inflation, but had not been fully effective because the supply curve was not normal that minimize additional investment; (3) The inflation control policies to expand employment opportunities was appropriate, ie in case of cost push inflation, but had not been effective because the demand curve was not normal that minimize additional employment opportunities; (4) The inflation control policies to promote poverty reduction was appropriate and effective, ie in case of cost push inflation; and (5) The investment, employment, and poverty created society welfare. Although the policies to improve the welfare from the investment improvement and poverty reduction tend to be counter-productive, but from the expansion of employment opportunities had been effective. Most investment still were capital intensive, while poverty still was massive. Keywords: society welfare, inflation, investment, employment, poverty