This paper analyses the consumption growth elasticity and inequality elasticity of poverty in Indonesia with a particular focus on the decentralisation period. Using provincial panel data, the effectiveness of growth in alleviating poverty across provinces is greater during the Decentralisation period post-2002 than at any earlier point in Indonesia's development history. The growth elasticity of poverty post-2002 is estimated to be-2.46, which means that a 10% increase in average consumption per capita would reduce the poverty rate proportionally by 24.6%. However, this paper also finds that the pro-poor impact of economic growth using mean consumption per capita as a proxy of economic growth (with a reduction of around 5.7 percentage points in the headcount poverty rate) has been offset to a greater extent by rising income inequality. In combination, the stronger negative impact of rising inequality has contributed to an increase of around 1.4 to 1.9 percentage points in the headcount poverty rate.

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