Abstract:
The Consumer Price Index (CPI) is one of the important indicators that used as basis
for determining the rate of inflation. In this study, the data that used are Dumai City’s
CPI from January 2016 until December 2019. The CPI consist of seven subgroups that
affect inflation in Dumai City. The seven subgroups are Foodstuff; Processed Food,
Baverage, Cigaretts, and Tobacco; Housing, Electricity, Water, and Gas; Clothing;
Health; Education, Recreation, and Sports; Transportation, Communication, and
Financial Services. These factors will be reduced using Principal Component Analysis
to identify the main factor that most contribute in determining the inflation rate. This
study shows that seven dimension of factors can be reduced into two main factors, they
are Primary Needs Factor and Complementary Needs Factor with a total variant
91.996%.
