Central Luzon’s Inflation Rate Slowed Down at 4.9%
Central Luzon’s annual inflation rate decelerated in March 2021 at 4.9 percent, breaking the four-month upward trend from October 2020 to February 2021. The posted rate is lower by 0.6 percentage point compared to the registered rate of 5.5 percent in February 2021. On the other hand, it is higher by 1.9 percentage points compared to the posted rate of 3.0 percent in March 2020. (See Figure 1)
Central Luzon ranked seventh with the highest inflation rates among the 17 regions in the country at 4.9 percent. Bicol region posted the highest inflation rate at 8.0 percent, higher than its registered rate of 7.5 percent in February 2021. Central Visayas remained to have the lowest registered inflation rate at 1.5 percent, but is slightly higher than its registered rate of 1.0 percent in February 2021.
The national annual inflation rate posted a decrease from 4.7 percent in February 2021 to 4.5 percent in March 2021.
Figure 2 presents the annual inflation rates of the different regions in the Philippines in March 2021.
The heavily weighted food and non-alcoholic beverages accelerated at a slower rate of 7.5 percent in March 2021 compared to its registered rate of 9.8 percent in February 2021. Slower accelerations were also posted in the indices of alcoholic beverages and tobacco (9.6%), and clothing and footwear (0.5%). On the other hand, faster rate of increase was posted in the indices of health (4.8%) and transport (10.6%).
Meanwhile, slower decline of 0.4 percent was registered in the index of housing, water, electricity, gas and other fuels. The indices of furnishings, household equipment and routine maintenance of the house (1.4%), communication (0.8%), recreation and culture (-1.1%), education (0.6%), and restaurant and miscellaneous goods and services (4.2%) posted the same increment with that of the previous month. (See Table 1)
The regional food index posted a slower rate of increase at 8.0 percent inflation in March 2021. It was 10.5 percent in February 2021 and 3.3 percent in March 2020. (See Table 1a, p. A-1)
The slowdown in the regional food index was primarily due to a slower rate of acceleration in the inflation of the following indices:
· Vegetables, 5.7 percent;
· Fruits, 1.3 percent;
· Meat, 25.0 percent;
· Fish, 7.2 percent;
· Rice, 1.9 percent;
· Other cereals, flour, cereal preparation, bread, pasta and other bakery products, 2.4 percent;
· Milk, cheese and eggs, 0.6 percent; and
· Food products not elsewhere classified, 4.6 percent.
On the other hand, the following indices registered a faster rate of increases:
· Corn, 2.6 percent; and
· Oils and fats, 4.5 percent.
Meanwhile, sugar, jam, honey, chocolate and confectionery posted a decline of 0.2 percent.
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 March 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 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 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.
b. 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.
c. 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.
d. 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.
e. 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.