Central Luzon’s Inflation Rate Accelerated Further at 5.5%
The annual inflation rate of Central Luzon further increased in February 2021 at 5.5 percent. It is the highest rate registered as of year to date. This figure is higher by 0.1 percentage point compared to the registered rate of 5.4 percent in January 2021. Furthermore, it is much higher by 2.3 percentage points compared to the posted rate of 3.2 percent in February 2020. (See Figure 1)
Central Luzon retained its rank as the fourth highest inflation rate among the 17 regions in the country. Cagayan Valley still had the highest inflation rate at 7.9 percent while, Central Visayas had the lowest registered inflation rate at 1.0 percent.
The national annual inflation rate posted an increase from 4.2 percent in January 2021 to 4.7 percent in February 2021.
Figure 2 presents the annual inflation rates of the different regions in the Philippines in February 2021.
Alcoholic beverages and tobacco accelerated at a faster rate of 10.3 percent in February 2021 compared to its registered rate of 9.4 percent in January 2021. Increments were also posted in the indices of health (4.5%), transport (7.8%), communication (0.8%), and restaurant and miscellaneous goods and services (4.2%). Meanwhile, slower increments in the rates were posted in the indices of food and non-alcoholic beverages (9.8%) and clothing and footwear (0.6%).
The index of housing, water, electricity, gas and other fuels declined at the same rate as that of the previous month at -0.8 percent while, recreation and culture declined at a faster rate of -1.1 percent. On the other hand, the same increment with that of the previous month were posted in the indices of furnishings, household equipment and routine maintenance of the house (1.4%) and education (0.6%). (See Table 1)
The regional food index posted a slower rate of increase at 10.5 percent inflation rate in February 2021. It was 11.2 percent in January 2021 and 3.0 percent in February 2020. (See Table 1a, p. A-1)
Increase in the inflation of the following indices were not able to accelerate faster the regional food index:
- Rice, 2.7 percent
- Meat, 28.3 percent
- Fish, 8.5 percent
- Oils and fats, 3.5 percent
- Food products not elsewhere classified, 4.7 percent.
On the other hand, contributing to the slower acceleration in the inflation rate of the regional food index were the lower increments registered in the following food indices:
- Corn, 1.2 percent
- Other cereals, flour, cereal preparation, bread, pasta and other bakery products, 2.7 percent
- Milk, cheese and eggs, 0.7 percent
- Fruits, 5.0 percent
- Vegetables, 20.9 percent.
Moreover, no change was posted in the annual index of sugar, jam, honey, chocolate and confectionery.
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 February 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 tte 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.