Central Luzon’s Inflation and Consumer Price Index (CPI) July 2021

Reference Number: 

2021-SRCPI-Jul 2021-053

Release Date: 

Thursday, September 2, 2021

Central Luzon’s Inflation Decreased at 3.9 percent

The annual inflation rate of Central Luzon was posted at 3.9 percent in July 2021 recording a 0.5 percentage point decrease compared to the registered rate in June 2021. However, the said rate is higher by 0.4 percentage point from the recorded rate in July 2020. (Figure 1)

Source: Survey of Retail Prices of Commodities for the Generation of CPI, PSA

Central Luzon ranked 7th lowest inflation rate among the 17 regions in the country at 3.9 percent. Cagayan Valley had the highest inflation rate at 6.9 percent while the regions of Central Visayas and BARMM both recorded the lowest inflation rate at 2.0 percent in July 2021.

The national annual inflation decelerated by 0.1 percentage point from the registered rate of 4.1 percent in June 2021 to 4.0 percent in July 2021.

Figure 2 presents the annual inflation rates of the different regions in the Philippines in July 2021.

Source: Survey of Retail Prices of Commodities for the Generation of CPI, PSA

The heavily weighted food and non-alcoholic beverages slowed down to 4.6 percent in July 2021 from its registered rate of 5.4 percent in June 2021. Likewise, slower increases were recorded in the indices of alcoholic beverages and tobacco (7.2%), furnishings, household equipment and routine maintenance of the house (1.1%), transport (9.1%), communication (0.5%), and restaurant and miscellaneous goods and services (3.0%).

Contrarily, faster increases were recorded in the indices of housing, water, electricity, gas and other fuels at 2.8 percent and health at 4.5 percent. On the other hand, same rate of increase was recorded in the indices of clothing and footwear at 0.9 percent and education at 0.6 percent with that of the previous month. (Table 1)

The regional food index increased at a slower rate in July 2021 at 4.8 percent, it is lower by 0.9 percentage point from its registered rate in June 2021.

The slower increases recorded in the following indices pulled down the acceleration in the regional food index:

  • Meat, 13.4 percent;
  • Fish, 6.2 percent;
  • Rice, 0.6 percent;
  • Other cereals, flour, cereal preparation, bread, pasta and other bakery products, 1.3 percent;
  • Sugar, jam, honey, chocolate and confectionery, 0.9 percent; and
  • Food Products not elsewhere classified, 1.4 percent.

Moreover, significant upsurges were recorded in the indices of corn and vegetables posting a 4.5 and 12.0 percentage points increase, respectively. Likewise, faster rate of increment was posted in the index of oils and fats at 4.4 percent.

On the other hand, faster rate of decline was recorded for milk, cheese and eggs (-0.3%) and fruits (-2.1%).  (Table 1a)

 

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 July 2021. 

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 behavior 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.

 

Attachments:
Central Luzon’s Inflation and Consumer Price Index (CPI) July 2021