Purpose: Poverty is still one of the main problems faced by developing countries like Indonesia, despite having experienced significant economic progress in recent decades. Economic inequality in Indonesia can be illustrated through an inverted triangle pattern, where most people live in poverty, while a handful of groups enjoy prosperity. Although the poverty rate in Indonesia is decreasing, there are still regions, especially on the island of Sumatra, that record higher poverty rates than other regions. In this case, financial inclusion is one of the solutions that is considered effective to reduce poverty. Access to adequate financial services provides opportunities for poor people to improve their well-being through savings, credit, or insurance. In addition, price stability is also important in poverty control. This study aims to analyze the influence of financial inclusion and inflation on poverty reduction on the island of Sumatra in the period 2017 to 2023.

Research methodology: This study uses a quantitative approach with panel data from 10 provinces on the island of Sumatra.

Results: The results of the regression analysis showed that the Financial Inclusion Index (IKK) had a significant negative effect on the poverty rate. In addition, inflation also has a significant negative effect on the poverty rate.