INFLATION
SI 4226 EKONOMI TEKNIK
Michael, S.T., M.Sc.
PROGRAM STUDI TEKNIK SIPIL – JURUSAN TEKNOLOGI INFRASTRUKTUR & KEWILAYAHAN
INSTITUT TEKNOLOGI SUMATERA
Doa
Robbisrohli Sodri wayassirli amri wahlul 'uqdatanmillisani yafqohu qouli
“Ya Tuhanku, lapangkanlah untukku dadaku, mudahkanlah untukku urusanku, dan
lepaskanlah kekakuan dari lidahku, supaya mereka mengerti perkataanku” (QS. Thoha: 25-
28)
ً ب زْدﻧﻲ ِ ِﻋْﻠﻣﺎ ً َو ْرُزْﻗﻧﻲ ِ ﻓَْﮭﻣﺎ
ِ ّ َر
Rabbi zidni ‘ilman war zuqni fahman
“Yaa Rabb, tambahkanlah ilmu bagiku, dan berilah aku karunia untuk memahaminya”
POKOK BAHASAN
Inflation
Inflation Rate
Present Worth Calculation
Cost Estimation
Inflation
⦁ The prices for goods and services are driven upward or downward because the effect of factors in economy.
⦁ Inflation is term related to the change in price level in economy, at which the amount of goods and/or servi
ces purchased is reduced for the same amount of money spent.
⦁ Deflation is the term for opposite condition
⦁ Price Index is a ratio used to measure the historical price-level changes for a particular commodities or gen
eral cost of living (e.g.,Consumer Price Index (CPI)
CPI
300
200
100 Year
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Jurusan Teknologi Infrastruktur dan Kewilayahan
Institut Teknologi Sumatera
⦁ Inflationrate (f)
the annual percentage of increase in prices of goods or services
⦁ Inflation-freeinterest rate (i)
represents the earning powerif moneywith the effect of inflation
removed
⦁ Inflatedinterest rate (if)
represents the rate of interest (earning powerof money)with
inflation considered
Inflation Rate
⦁ The rate of inflation (+f) (or deflation (-f)) is calculated based on changes in prices in
successive years. This rate has a compounding effect.
⦁ Inflated interest,
⦁ Dollars in period t1
i f = i + f + if $(t 2 )
$t1 =
Inflation t1-t 2
⦁ Annual inflation rate for year (t+1)
⦁ Today’s dollar
CPI (t+1) - CPI (t )
f = $(t 2 )
CPI (t ) $t1 =
(1+ f )n
KK Manajemen Rekayasa Konstruksi - Teknik Sipil
Jurusan Teknologi Infrastruktur dan Kewilayahan
Institut Teknologi Sumatera
Present Worth Calculation
An item that cost $ 1,000 today is subjected to 10% rate of
inflation and 8% of interest
(1) (2) (3) (4) (5) = (4)(P/F, i, n)
EOY Cost increase Future cost Present worth
due to in then
inflation dollars
0 1,000 1,000 1,000
1 100 1,100 1,000 925
2 110 1,210 1,000 857.3
3 121 1,331 1,000 793.8
KK Manajemen Rekayasa Konstruksi - Teknik Sipil
Jurusan Teknologi Infrastruktur dan Kewilayahan
Institut Teknologi Sumatera
Present Worth Calculation
⦁ An item that cost $ 1,000 today is subjected to 10% rate of inflation and 8%
of interest
⦁ Inflated interest rate,if = I + f+ if = 0.08 + 0.1 + 0.1*0.08
= 0.188 (18.8%)
(1) (2) (3) (4) = (3)(P/F, if, n)
EOY Cost increase due Future cost in Present worth
to inflation then dollars
0 1,000 1,000
1 100 1,100 925.9
2 110 1,210 857.3
3 121 1,331 793.8
KK Manajemen Rekayasa Konstruksi - Teknik Sipil
Jurusan Teknologi Infrastruktur dan Kewilayahan
Institut Teknologi Sumatera
Exercises
1. Bambang is scheduled to receive Rp.50 million payment from a trust fund 10 years from now. The inflation rat
e is estimated at an average of 6% annually.Find the constant value (Rp) equivalent of this payment if the const
ant-Rp base is (a) t = 0,
(b) t = 5 ,and (c) t = -3 (three year prior to the present)
2. A payment of Rp 2XY millions is to be received 8 years from now,followed by additional Rp 1Y0 millions 10 ye
ars afterward.Alternatively, a sum of Rp 320 millions can be received at the end of 15 years.If the annual rate o
f inflation is 5% and interest rate is estimated at 9%,which installment is preferred,constant dollars analysis
3. The following shows the consumer price index recorded over the period of 9 years
Year CPI Year CPI Year CPI
1995 1.7 1998 3.1 2001 2.6
1996 1.9 1999 2.7 2002 2.9
1997 1.8 2000 2.5 2003 2.9
determine the inflation rate at year 1998,2000,and 2002
KK Manajemen Rekayasa Konstruksi - Teknik Sipil
Jurusan Teknologi Infrastruktur dan Kewilayahan
Institut Teknologi Sumatera
Cost Estimation
⦁ Cost at any point in time can be estimated using comparison of cost at any other time
⦁ Cost Index is a ratio of the cost of an item today to the cost at some point in time
It
Ct = C 0
I0
Ct = estimated cost at present time t
C0 = cost at base time t0
It = index value at time t
I0 = index value at time t0
⦁ Cost Capacity Factor is a ratio of a certain volume to the other volume
x
æ Q2 ö
C 2 = C 1ç ÷ C2 =estimatedcost at capacity Q2 C1
è Q1 ø
=cost at capacityQ1
Q1 =capacity1
Q2 =capacity2
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Jurusan Teknologi Infrastruktur dan Kewilayahan
Institut Teknologi Sumatera
Execises
1. An investor is considering to build a new oil refinery plant with the capaci
ty of 800,000 barrel per day (bpd). 15 years ago a similar plant with a cap
acity of 700,000 bpd was built for US$ 575 million. If the inflation is
estimated at 4% annually,what is the estimated cost for building the new
plant? C ost capacity index for oil refinery is 0.64
2. An item is bought for Rp 7,5 million five years ago when the consumer
price index is recorded at 112 point.Today,when the index is calculated
at 119, what is the estimated cost of the same item?
3. What will be the value of a bulldozer cost index in 2010 if it was 276.5 in
2003,when it increases 6% a year?
KK Manajemen Rekayasa Konstruksi - Teknik Sipil
Jurusan Teknologi Infrastruktur dan Kewilayahan
Institut Teknologi Sumatera
Doa
Allahumma inni astaudi’uka ma ‘allamtanihi fardudhu ilayya ‘inda hajati ilaihi wa laa
tansanihi ya rabbal ‘alamina.
“Ya Allah, sesungguhnya aku menitipkan pada-Mu apa yang telah Engkau ajarkan
kepadaku, maka kembalikanlah padaku saat aku membutuhkannya dan janganlah
Engkau jadikan aku lupa padanya, wahai Tuhan semesta alam.”
TERIMA
KASIH
