Central Luzon’s Inflation and Consumer Price Index (CPI) April 2020

Reference Number: 

2020-SRCPI-Apr2020-055

Release Date: 

Monday, June 8, 2020

Central Luzon’s Inflation Rate Slowed Down to 2.6%

The annual inflation rate of Central Luzon in April 2020 continued its downturn from the 3.5 percent recorded at the start of this year to 2.6 percent in April 2020. It is also lower than the April 2019 inflation rate which was posted at 3.2 percent (See Figure 1).

Figure 1 presents the year-on-year changes of the CPI from April 2019 to April 2020.

Among the 17 regions in the country Central Luzon and Ilocos region ranked the eight highest annual inflation rate at 2.6 percent. SOCCSKSARGEN registered the highest inflation rate at 3.6 percent followed by Western Visayas at 3.4 percent. National Capital Region (NCR), on the other hand, posted the lowest inflation rate at 1.2 percent. The national inflation rate in April 2020 was registered at 2.2 percent (See Figure 2).

Slowdowns posted in the indices of alcoholic beverages and tobacco (29.3%), clothing and footwear (3.0%), housing, water, electricity, gas and other fuels (0.8%), restaurant and miscellaneous goods and services (1.6%) and decline in the transport (-7.7%) led to a decrease in the region’s general inflation rate by 0.4 percentage points in April 2020.

Food and non-alcoholic beverages was the only index that posted an increase in April 2020 at 4.2 percent. The rest of the indices retained their March 2020 rates as follows:

  • Furnishings, household equipment and routine maintenance of the house, 2.8 percent
  • Health, 1.8 percent
  • Communication, 0.1 percent
  • Recreation and culture, 1.2 percent; and
  • Education, 4.3 percent

A faster rate of 4.2 percent was posted in the food index in April 2020 which is higher from the 3.3 and 3.8 percent in March 2020 and April 2019 respectively. The increase in the food index was mostly due to the increases posted in the following indices:

  • Corn, 4.0 percent
  • Other cereals, flour, cereal preparation, bread, pasta and other bakery products,

3.3 percent

  • Meat, 3.2 percent
  • Fish, 10.9 percent
  • Milk, cheese and eggs, 6.1 percent
  • Fruits, 10.5 percent
  • Vegetables, 12.9 percent and
  • Food products not elsewhere classified, 9.6 percent.

While declines were registered in the indices of rice at -3.1 percent, and sugar, jam, honey, chocolate and confectionery at -0.6 percent. On the other hand, oils and fats posted slower increase at 1.7 percent. (See Table 1a, p. A-1)

 

 

Technical Notes

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 April 2020. 

CPI

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

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

Inflation Rate

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.

 

 

 

 

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