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NSO Region 10
A
FREQUENT QUESTION raised by consumers is “how much would a specified amount of
money at a certain period of time be worth today?" If you would be looking
at price increases on the same basket of goods, even for just a short period of
time, do you take it as enough warning of a coming periods of inflation?
Indeed, consumers and investors
consider inflation as an economic phenomenon that has an increasing change in
the price of goods and services. Price inflation is typically measured using the
Consumer Price Index (CPI .which takes into consideration a constant basket of
goods.
It is the National Statistics
Office that generates the CPI.
Accordingly, NSO had revised last June the base year from 2000 to 2006 including the weights for the consumer price index (CPI) to ensure that the key measure reflects the current situation. As reported by the agency, “as household expenditure patterns vary (they tend to spend less on some items and more on others), weights are used to ensure that the CPI reflects the relative importance of each item or group of items in the market basket. The weights are expressed as a proportion of household expenditure for an item to the total national expenditure."
According to the latest results of the Consumer Price Index (CPI) Survey conducted by the National Statistics Office, the Philippine’s annual headline inflation rate increased to 3.2 percent in July 2012 from 2.8 percent in June 2011. This was due to higher annual increments registered in all the commodity groups except those in clothing and footwear, health, transport, and education indices. Inflation a year ago was 4.9 percent.
On the other hand, inflation in the National Capital Region (NCR) jumped to 3.1 percent in July from 2.2 percent in June. Except in clothing and footwear, health, transport, communication, and education indices, all the commodity groups posted higher annual gains. Annual inflation in areas outside NCR grew 3.2 percent in July from 3.0 percent in June. lt resulted from higher annual upticks in the indices of food and non-alcoholic beverages; housing, water, electricity, gas, and other fuels; furnishing, household equipment and routine maintenance of the house; and recreation and culture. Moreover, the country’s month-on-month inflation decelerated to 0.3 percent in July from 0.5 percent in June. Price increases were observed in food items like rice, meat, fish, vegetables and sugar. However, these were tempered by the downward price adjustments in cooking oil, selected condiments and seasonings, gasoline and diesel.
ln Region 10, inflation rate was highest in Camiguin with 14.7 and the only province in the region with a two digit rate. This was attributed to the significant increase on the provincial index for housing, water, electricity, gas, and other fuels by 30.9 percentage points. The commodity price index for all income households in Camiguin posted at 154.3 which is also noted as the highest in the region.
So, how do inflation and CPI affect you? Inflation erodes your purchasing power. This means that, as prices of goods and services increase, consumers can purchase or consume less and less for the same amount of money. This would suggest that your peso will be able to buy fewer goods next year, and yet fewer goods every year after that.
Moreover, an inverse relationship exists between purchasing power and CPI. Therefore, we expect that the purchasing power of the peso (PPP) will decline if CPI is high. If we try to look at the purchasing power of peso in Camiguin, it registered the lowest value with P0.65 and yet highest in CPI. Other provinces in region l0’s PPP ranged from P.70 to P 0.75 and the CPls were lower compared with the province of Camiguin.
The Purchasing Power of Peso shows how much the peso in the base period is worth in another period. It gives an indication of the real value of the peso in a given period relative to the peso value in the base period.
Posted in: Press Release
