ABSTRAKWe investigate consumer price convergence for 82 Indonesian cities using monthly
data from 2014 to 2019. To do so, we employ recent techniques of club convergence
and weak sigma convergence. The results reveal, first, consumer price divergence,
implying price rigidities across the cities. Second, we find four clubs, suggesting that
Indonesian cities converge along four unique transition paths. Third, we find weak
evidence of consumer price convergence, suggesting that prices among Indonesian
cities adjust, but not freely. Policy should therefore consider unique convergence paths
for each club to promote stronger consumer price convergence.