Central Luzon Inflation Rate Slightly Accelerated to 2.3%
The annual inflation rate of Central Luzon in October 2019 went up at 2.3 percent after it posted deceleration for the past two months (See Figure 1). Its annual rate in September 2019 was 2.1 percent while in October 2018, 4.4 percent.
Figure 1 presents the year-on-year changes of the CPI from October 2018 to October 2019.
The annual inflation rate of the region accelerated to 2.3 percent for the month of October 2019. It recorded the highest annual inflation rate among the seventeen regions of the country. Six regions posted negative annual rates in October 2019, namely Zamboanga Peninsula (1.3%), Eastern Visayas (0.7%), Davao Region (0.7%), Cagayan Valley (0.5%), Caraga (0.4%) and Central Visayas (0.1%). Meanwhile, Ilocos Region followed Central Luzon in posting the second highest inflation rate at 1.8 percent. The national inflation rate in October 2019 was posted at 0.8 percent, lower than the 0.9 percent posted in September 2019. (See Figure 2)
The acceleration in the annual inflation rate of the region can be attributed to the increase in the heavily weighted food and non-alcoholic beverages at 0.5 percent from a 0.2 percent decline in September 2019. (See Table 1)
The following indices posted slight decreases from September 2019:
- Alcoholic beverages and tobacco, 26.2 percent
- Clothing and Footwear, 3.5 percent
- Housing, water, electricity , gas and other fuels, 3.0 percent
- Furnishings, household equipment and routine maintenance of the house, 3.3 percent
- Health, 3.1 percent
- Restaurant and miscellaneous goods and services, 2.7 percent
Meanwhile, transport index posted a decline of 0.8 percent from its 0.2 percent rate in September 2019. On the other hand, communication (0.1%), recreation and culture (1.3%) and education (4.1%) retained their September 2019 rate. (See Table 1)
Acceleration in the annual increment of the regional food index was registered at 0.2 percent in October 2019. It was -0.6 percent in September 2019 and 8.0 percent in October 2018. (See Table 1a, p. A-1)
The heavily weighted rice further declined to 7.8 percent in October 2019 from 6.6 percent in September 2019. Declines were also registered in the indices of corn at 4.7 percent, vegetables at 8.5 percent and sugar, jam, honey, chocolate and confectionery at 1.6 percent. (See Table 1a, p. A-1)
In addition, slower rate of increase was registered in the index of fruits at 9.7 percent. (See Table 1a, p. A-1)
On the other hand, the following food indices posted accelerated annual increments:
- Other cereals, flour, cereal preparations, bread, pasta and other bakery products, 4.3 percent
- Meat, 4.9 percent
- Fish, 3.6 percent
- Milk, cheese and eggs, 4.7 percent
Meanwhile, oils and fats (1.6%) and food products not elsewhere classified (6.0%) posted the same rate for October 2019 with that of September 2019. (See Table 1a, p. A-1)
Month-on-Month Price Situation
Higher increment for the general price index of consumer items was registered in October 2019 at 0.3 percent compared to its posted rate of 0.2 percent in September 2019. This increase can be attributed to the higher increments posted in the following indices:
- Food and non-alcoholic beverages, 0.6 percent
- Housing, water, electricity, gas and other fuels, 0.1 percent
- Communication, 0.1 percent
On the other hand, decelerated month-on-month inflation rate were posted in the indices of alcoholic beverages and tobacco at 0.2 percent and clothing and footwear at 0.1 percent. In addition, no changes were posted on health, recreation and culture, education and restaurant and miscellaneous goods and services for the month of October 2019. Meanwhile, furnishings, household equipment and routine maintenance of the house and transport posted the same rate for October 2019 as that of September 2019. (See Table 2)
A slow hike at a rate of 0.7 percent was registered in the general index of food in October 2019. This hike was supported by higher increment in the following indices:
- Corn, 4.9 percent
- Other cereals, flour, cereal preparation, bread, pasta and other bakery products, 0.4 percent
- Meat, 0.9 percent
- Fish, 1.0 percent
- Milk, cheese and eggs, 1.0 percent
- Oils and fats, 0.2 percent
- Vegetables, 5.1 percent
Declines were also noted in the indices of the heavily weighted rice (0.8%) and sugar, jam, honey, chocolate and confectionery (0.2%). Meanwhile, fruits and food products not elsewhere classified registered no change on their inflation rates in October 2019. (See Table 1a, p.A-1)
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 October 2019.
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.