Central Luzon Inflation Rate Decelerated further to 2.1%
Annual inflation rate of Central Luzon in September 2019 dipped further to 2.1 percent after it started decelerating in August 2019 (See Figure 1). Its annual rate in August 2019 was 2.8 percent while in September 2018, 4.5 percent.
Figure 1 presents the year-on-year changes of the CPI from September 2018 to September 2019.
The annual inflation rate of the region registered a slowdown of 2.1 percent for the month of August 2019. It retained its ranking on the second spot with the highest annual inflation rate across the country. Four regions posted negative annual rates in September 2019, namely: Zamboanga Peninsula (1.3%), Caraga (0.3%), Ilocos Region (0.2%) and Eastern Visayas (0.1%). Meanwhile, MIMAROPA continued to post the highest inflation rate at 2.2 percent. The national inflation rate in September 2019 was posted at 0.9 percent, lower than the 1.7 percent posted in August 2019. (See Figure 2)
Decline in the heavily weighted food and non-alcoholic beverages at 0.2 percent is the primary contributor to the deceleration observed in the general annual inflation rate of the region for the month of September 2019. Other indices that supported the deceleration were the housing, water, electricity, gas and other fuels (3.3%), health (3.2%), transport (0.2%) and recreation and culture (1.3%). (See Table 1)
On the other hand, alcoholic beverages and tobacco index posted an increment of 26.4 percent. In addition, higher mark-ups were also registered in the indices of clothing and footwear at 3.6 percent, furnishings, household equipment and routine maintenance of the house at 3.4 percent and restaurant and miscellaneous goods and services at 2.8 percent. Meanwhile, communication and education retained its August 2019 rate at 0.1 and 4.1 percent, respectively. (See Table 1)
The regional food index posted a decline of 0.6 percent in September 2019. It was 0.9 percent in August 2019 and in September 2018, 8.7 percent. (See Table 1a, p. A-1)
The heavily weighted rice registered further a decline of 6.6 percent in September 2019. The same behavior was posted in the indices of corn at 8.6 percent, vegetables at 15.5 percent and sugar, jam, honey, chocolate and confectionery at 0.7 percent. (See Table 1a, p. A-1)
In addition, slower rate of increase were also posted in the indices of other cereals, flour, cereal preparations, bread, pasta and other bakery products (4.2%), fish (3.5%), oils and fats (1.6%), fruits (10.3%) and food products not elsewhere classified (6.0%). (See Table 1a, p. A-1)
Meanwhile, milk, cheese and eggs accelerated at a rate of 3.8 percent in September 2019 while meat retained its August 2019 rate of 3.3 percent for September 2019. (See Table 1a, p. A-1)
Month-on-Month Price Situation
The general price index of consumer items decelerated in September 2019 as it posted a month-on-month rate of 0.2 percent compared to its posted rate of 0.6 percent in August 2019. This decrease can be attributed to the lower increments posted in the heavily weighted food and non-alcoholic beverages at 0.2 percent and in the following indices:
- Alcoholic beverages and tobacco, 4.7 percent
- Clothing and footwear, 0.3 percent
- Furnishings, household equipment and routine maintenance of the house, 0.1 percent
- Health, 0.1 percent
- Restaurant and miscellaneous goods and services, 0.2 percent.
In addition, decline in the month-on-month inflation rate in the index of housing, water, electricity, gas and other fuels was also posted at 0.5 percent.
On the other hand, transport registered an accelerated rate of 0.1 percent in September 2019.
Meanwhile, communication, recreation and culture and education registered no movement in September 2019. (See Table 2)
An increase of 0.3 percent was registered in the general index of food in September 2019. This hike was mainly attributed to the increase posted in corn index at 0.3 percent and supported by increments in the following indices:
- Meat, 0.2 percent
- Fish, 0.5 percent
- Vegetables, 3.4 percent
On the other hand, declines in the indices of the heavily weighted rice (0.9%), sugar, jam, honey, chocolate and confectionery (0.5%) and food products not elsewhere classified (0.3%) was not able to slowdown the general hike for food. Decreases were also posted in the indices of other cereals, flour, cereal preparations, bread, pasta and other bakery products (0.2%), milk, cheese and eggs (0.8%), and fruits (1.1%). (See Table 1a, p.A-1)
Meanwhile, oils and fats retained their previous month’s inflation rates in September 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 September 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.