Central Luzon Inflation Rate Decelerated to 2.2%
The annual inflation rate of Central Luzon in November 2019 decreased at 2.2 percent after it posted acceleration the previous month (See Figure 1). Its annual rate in October 2019 was 2.3 percent while in November 2018, 4.4 percent. (See Table 1)
Figure 1 presents the year-on-year changes of the CPI from November 2018 to November 2019.
Central Luzon’s annual inflation rate decelerated to 2.2 percent for the month of November 2019. It retained its position with the highest annual inflation rate across the country since October 2019. For November 2019, two regions posted negative annual rates, namely: Zamboanga Peninsula (0.5%) and Cagayan Valley (0.1%). Meanwhile, MIMAROPA followed Central Luzon in posting the highest inflation rate at 1.8 percent. The national inflation rate in November 2019 was posted at 1.3 percent, higher than the 0.8 percent posted in October 2019. (See Figure 2)
The slower increment in the annual inflation rate of the region can be attributed to the decreases posted in indices of clothing and footwear (3.3%), housing, water, electricity, gas and other fuels (2.3%), furnishings, household equipment and routine maintenance of the house (2.9%), health (2.6%), restaurant and miscellaneous goods and services (2.3%). Further, transport index declined at 2.7 percent. (See Table 1)
A faster rate of increase was posted in the heavily weighted food and non-alcoholic beverages at 0.8 percent, alcoholic beverages and tobacco at 30.2 percent and communication at 0.2 percent.
On the other hand, recreation and culture (1.3%) and education (4.1%) retained their October 2019 rate. (See Table 1)
The annual increment of the regional food index accelerated at 0.5 percent in November 2019. It was 0.2 percent in October 2019 and in November 2018, 7.0 percent. (See Table 1a, p. A-1)
The following food indices accounts for the accelerated rate of the food index:
· Meat, 5.1 percent
· Fish, 5.2 percent
· Milk, cheese and eggs, 4.8 percent
On the other hand, the heavily weighted rice posted a slower decline of 6.6 percent in November 2019 from its registered decline of 7.8 percent in October 2019. Declines were also registered in the indices of corn at 1.3 percent, vegetables at 8.9 percent and sugar, jam, honey, chocolate and confectionery at 2.1 percent. (See Table 1a, p. A-1)
In addition, slower rate of increase was registered in the indices of other cereals, flour, cereal preparations, bread, pasta and other bakery products at 3.4 percent, oils and fats at 0.8 percent, fruits at 6.8 percent and food products not elsewhere classified at 5.0 percent. (See Table 1a, p. A-1)
Month-on-Month Price Situation
The general price index of consumer items in November 2019 retained its posted rate of 0.3 percent in October 2019.
Faster rate of increase were posted by the indices of alcoholic beverages and tobacco at 5.2 percent, furnishings, household equipment and routine maintenance of the house at 0.2 percent, recreation and culture at 0.1 percent and restaurant and miscellaneous goods and services at 0.1 percent. (See Table 2)
On the other hand, the heavily weighted food and non-alcoholic beverages registered a slower rate of increase while the following indices posted declines:
· Housing, water, electricity, gas and other fuels, 0.2 percent
· Transport, 0.4 percent
Meanwhile, health, communication, and education posted no movement for November 2019. (See Table 2)
The general index of food posted a slower rate of 0.2 percent in November 2019 compared to the faster rate of increase registered in October 2019 at 0.7 percent. This drop was primarily supported by decline in the heavily weighted rice and also in the following indices:
· Meat, 0.1 percent
· Fruits, 0.2 percent
· Vegetables, 1.9 percent
· Sugar, jam, honey, chocolate and confectionery, 0.3 percent
Slower rate of increase were also posted in the indices of corn (3.3%) and milk, cheese and eggs (0.3%). No monthly movements, however, were registered in the indices of other cereals, flour, cereal preparation, bread, pasta and other bakery products and oils and fats.
On the other hand, higher increments were posted in the indices of fish at 2.9 percent and food products not elsewhere classified at 1.3 percent in November 2019. (See Table 1a, p.A-1)
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 November 2019.
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.