The Government, through appointed agency seeks to improve the investment climate and the policies established by the existing rules, and one of them through inflation rate prevailing in the market. The purpose of this study was to determine the effect of changes in the rate of inflation to the JCI and to determine the feasibility of trading volume as an intermediary variable in regard with relationship of changes in the inflation rate with JCI. The results show a variable volume can be an intermediary in the relationship between changes in the rate of inflation to the JCI, although the direct relationship changes of inflation with JCI found no significant effect. It is important to be considered in the decision for investors and traders to enter the inflation rate as an additional variable in the consideration in investment decision.
Keywords: Inflation, consumer price index, stock index, volume, Jakarta Composite Index.