Year-on-Year Price Index Situation for the month of May 2021
The annual inflation rate for the bottom 30 percent income household in Central Luzon slightly increased to 5.0 percent in May 2021, a 0.1 percentage point increase from its registered rate of 4.9 percent in April 2021. Further, it is still higher by 2.2 percentage points than the recorded inflation rate in May 2020 at 2.8 percent. (See Figure 1)
Central Luzon ranked as the 7th highest inflation rate among the 17 regions in the country at 5.0 percent. Bicol Region continued to have the highest inflation rate at 6.8 percent while, Zamboanga Peninsula remained to have the lowest inflation rate at 1.6 percent. A 0.4 percentage point decreased in the national inflation rate for the bottom 30 percent income household was recorded from 4.9 percent in April 2021 to 4.5 percent in May 2021.
Year-on-Year Price Change by Commodity Group
Increase region’s inflation rate to 5.0 percent was brought about by the increment in the index of the heavily weighted Food and Non-alcoholic Beverages (4.4%). In addition, slower increases in the following indices were recorded in May 2021:
- Clothing and Footwear, 3.1 percent;
- Housing, Water, Electricity, Gas and Other Fuels, 1.4 percent; and
- Furnishing, Household Equipment and Routine Maintenance, 1.9 percent.
On the other hand, a decrease in the indices of Alcoholic Beverages and Tobacco (11.1%), Health (2.6%), Transport (23.7%) and Communication (0.8 %) were registered in May 2021. Further, a slower decline was posted in the index of Recreation and Culture at 0.9 percent.
Meanwhile, indices of Education, and Restaurant and Miscellaneous Goods and Service at 0.1 percent and 5.7 percent, respectively, remained unchanged. (See Table A)
Year-on-Year Price Change by Food Group
Faster acceleration in the indices of Meat (27.4%) and Fruits (4.8%) were posted in May 2021. Moreover, slower increases were also observed in the following indices:
- Other Cereals, Flour, Cereal Preparation, Bread, Pasta and Other Bakery Products, 2.1 percent;
- Fish, 8.0 percent;
- Oils and Fats, 5.5 percent; and
- Sugar, Jam, Honey, Chocolate and Confectionery, 1.9 percent.
On the contrary, faster decline were recorded in the indices of rice and vegetables at 0.5 percent and 13.2 percent, respectively. In addition, Corn (0.4%) and Food Products, N.E.C (1.1%) posted slower decline in May 2021. Further, a decrease in the index of Milk, Cheese and Eggs at
1.8 percent was registered. (See Table B)
This Special Release presents the results of the Survey of Retail Prices of Commodities and Services for the Generation of Consumer Price Index (CPI) conducted in May 2021.
The CPI is an indicator of the change in the average retail prices of a fixed basket of goods and services commonly purchased by households for their day-to-day consumption relative to a base year.
Uses of the CPI
As an indicator, the CPI is most widely used in the calculation of the inflation rate and purchasing power of the peso. It is a major statistical series used for economic analysis and as monitoring indicator of government economic policy.
The CPI is also used as a deflator to express value series in real terms, which is, measuring the change in actual volume of transaction by removing the effects of price changes. Another major importance of the CPI is its use as basis to adjust wages in labor management contracts as well as pensions and retirement benefits. The CPI also serves as inputs in wage adjustments through the collective bargaining agreements.
Components of the CPI
- Base Period
This is a reference date or simply a convenient benchmark to which a continuous series of index numbers can be related. Since the CPI measures the average changes in the retail prices of a fixed basket of goods, it is necessary to compare the movement in previous years back to a reference date at which the index is taken as equal to 100.
The present series uses the 2012 as the base year. The year 2012 was chosen as the base year because it is the year when the Family Income and Expenditure Survey (FIES) was conducted. The FIES is the basis of the CPI weights.
- Market Basket
Market basket refers to a sample of thousands of varieties of goods purchased for consumption and services availed by the households in the country. It was selected to represent the composite price behaviour of all goods and services purchased by the consumers.
- Weighting System
The weighting system is a desirable system that considers the relevance of the components of the index. For the CPI, the weighting pattern uses the expenditures on various consumer items purchased by households as a proportion to total expenditures.
- Geographic Coverage
CPI values are computed at the national, regional, and provincial levels, and for selected cities. A separate CPI for NCR is also computed.
- Classification Standards
The 2012-based CPI series is the first in the series that used the 1999 United Nations Classification of the Individual Consumption According to Purpose (COICOP) in determining the commodity groupings of the items and services included in the market basket. The 2012-based CPI also follows the 2015 Philippine Standard Geographic Classification codes.
The inflation rate (IR) is the annual or monthly rate of change of the CPI in percent. It is interpreted in terms of declining purchasing power of money.