Central Luzon’s Inflation and Consumer Price Index (CPI) July 2022

Reference Number: 

2022-SRCPI-Jul2022-082

Release Date: 

Tuesday, August 9, 2022

Central Luzon’s Inflation Accelerated Further to 7.9 Percent

Inflation in Central Luzon continued to accelerate at a faster pace of 7.9 percent in July 2022 from 7.5 percent in June 2022.  This is the highest annual rate recorded for the region since January 2018. In addition, July 2022 inflation was higher by 4.1 percentage points from 3.8 percent in July 2021 and 0.4 percentage point higher from 7.5 percent in June 2022. (Figure 1)

Central Luzon ranked third among regions with the highest inflation, while Davao Region ranked first at 8.6 percent followed by Zamboanga Peninsula at 8.3 percent.  Bangsamoro Autonomous Region in Muslim Mindanao remained to have the lowest inflation at 3.6 percent followed by National Capital Region at 5.1 percent.

The Philippines’ annual headline inflation also continued to move at a faster pace of 6.4 percent in July 2022.

Figure 2 presents the annual inflation rates of the different regions in the Philippines in July 2022.

The uptrend of inflation for July 2022 was primarily brought about by the higher annual growth rate in the index of food and non-alcoholic beverages at 7.3 percent from 6.7 percent in June 2022. This was followed by housing, water, electricity, gas and other fuels at 10.5 percent and the index of transport at 19.3 percent.

Moreover, higher annual increments were posted in the following indices:
• Alcoholic beverages and tobacco (11.2%);
• Clothing and footwear (3.1%);
• Furnishings, household equipment and routine household maintenance (2.9%);
• Health (2.6%);
• Information and Communication (0.7%);
• Recreation, sport and culture (3.2%);
• Restaurants and accommodation services (3.1%); and
• Personal care, and miscellaneous goods and services (3.9%).

On the other hand, same rate of increase with that of the previous month was observed in the indices of education services (0.1%) and financial services (0.0%). (Table 1)

The annual growth rate in the regional food index registered an increment of 7.7 percent in July 2022 from 7.1 percent in June 2022. The continued upward trend in the food index can be primarily attributed to the increases in the annual growth rate of the following food indices:
• Meat and Other Parts of Slaughtered Land Animals (8.3%); and
• Fish and Other Seafood (10.8%).

It can also be credited to the increases in the index of the following food indices:
• Corn (12.3%);

• Flour, Bread and Other Bakery Products, Pasta Products, and Other Cereals (7.5%);
• Milk and Other Dairy Products, and Eggs (7.2%);
• Oils and fats (24.9%);
• Sugar, Confectionery and Desserts (17.4%); and
• Ready-Made Food and Other Food Products N.E.C. (6.2%).

Faster rate of increase was also noted for the index of fruits and nuts at 0.0 percent in July 2022 from -3.8 percent in June 2022.
Meanwhile, slower rate of increases was registered in the indices of rice at 3.1 percent and vegetables, tubers, plantains, cooking bananas and pulses at 8.6 percent. (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 2022. 

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

a. 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 of CPI is rebased from base year 2012 to base year 2018.

b. Market Basket

Market basket refers to a sample of goods and services commonly purchased by the households.

The market basket for the CPI for All Income Households is updated using the results of the 2021 Survey of Key Informants (SKI). The survey, which was undertaken in March 2021, was conducted nationwide to store managers, sellers, or proprietors, in order to obtain information on the most commonly purchased goods and availed of services by the households.

The commodities included in the 2018-based CPI market basket are the modal commodities which were considered as the most commonly purchased/availed of commodities by the households.

The commodities in the 2018-based CPI market basket are grouped/classified according to the 2020 Philippine Classification of Individual Consumption According to Purpose (PCOICOP) which is based on the United Nations COICOP. Meanwhile, the commodities in the 2012-based CPI market basket used the 2009 PCOICOP version of classification of commodities.
Table 1 below presents the comparison of the commodity classification based on 2009 and 2020 PCOICOP which are adopted in the 2012-based and 2018-based CPI market baskets, respectively.

c. Weighting System

The weights for the 2018-based CPI were derived from the expenditure data of the 2018 Family Income and Expenditure Survey (FIES). The weight for each commodity/group of commodities is the proportion of the expenditure of the expenditure of commodity/group of commodities to the total national expenditure. The sum of the weights of the commodity groups at the national level is equal to 100.

d. Geographic Coverage

CPI values are computed at the national, regional, and provincial levels, for selected cities. A separate CPI for NCR is also computed.

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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