The annual inflation rate of Central Luzon moved at a slightly slower rate of 4.4 percent in October 2018 compared to the September 2018 rate of 4.5 percent. In October 2017, it was recorded at 2.8 percent.
The slower growth was due to the slowdown movements recorded in food and non-alcoholic beverages and housing, water, electricity, gas and other fuels at 8.1 percent and 1.2 percent, respectively.
On the other hand, slightly higher rate were posted by the following indices:
- Alcoholic beverages and tobacco, 12.0 percent
- Clothing and footwear, 0.9 percent
- Furnishings, household equipment and routine maintenance of the house, 1.2 percent
- Transport, 7.3 percent
- Restaurant and miscellaneous goods and services, 0.9 percent
The rest of the commodity groups retained their previous month’s growth.
Figure 1 presents the year-on-year changes of CPI from October 2017 to October 2018.
A gradual increase on the annual growth of index for food alone was recorded at 8.0 percent in October 2018 compared with the 8.7 percent rate in September 2018. It was 2.9 percent in the same period a year ago. (See Table 1a, p.A-1)
Higher annual increment was noticed in the index of heavily-weighted rice at 10.2 percent. Other food items that contributed to the increase were the following:
- Other cereals, flour, cereal preparation, bread, pasta and other bakery products and fruits, 1.5 percent
- Fish,10.9 percent
- Oils and fats, 1.1 percent
- Sugar, jam, honey, chocolate and confectionery, 6.4 percent
- Food products not elsewhere classified, 4.7 percent
On the other hand, lower annual growths were recorded for corn (11.0%), meat (5.8%), fruits (5.9%) and vegetables (20.5%) compared with their corresponding growths a month ago.
Across the region, Tarlac posted the highest annual increment at 7.6 percent closely followed by Zambales at 7.4 percent while Bataan remained the lowest at 1.9 percent.
Figure 2 presents the year-on-year inflation rates in October and September 2018.
Month-on-Month Price Situation
Prices of consumer items generally slowed down to 0.2 percent in October 2018, lower by 0.7 percent compared with that of the previous month. Lower annual increase in the heavily-weighted food and non-alcoholic beverages (0.1%) initiated the slower growth. Further supporting the slowdown of prices were the gradual growth in health (0.1%) and transport (0.8%). Likewise, recreation and culture posted no growth compared to its 2.0 percent growth a month ago.
On the other hand, the following indices registered upward annual increases:
- Alcoholic beverages and tobacco, 0.3 percent
- Clothing and footwear, 0.2 percent
- Furnishings, household equipment and routine maintenance of the house, 0.2 percent
- Communication, 0.1 percent
- Restaurant and miscellaneous goods and services, 0.1 percent
The rest of the commodity group posted no growth during the month.
The indices of food items during the month declined at a rate of 0.1 percent after posting a growth of 1.9 percent the previous month. The decline was primarily driven by the heavily weighted rice which registered a slower growth of 0.5 percent compared to the 2.5 percent posted a month ago. Further, decline in the meat and vegetables at 0.7 and 2.9 percent, respectively, pulled the indices down.
Likewise, slower rate increment in the following food indices also contributed to the overall downward price adjustment:
- Corn, 0.5 percent
- Fish, 1.0 percent
- Milk, cheese and eggs, 0.2 percent
- Fruits, 0.5 percent
On the other hand, incremental adjustments in the following indices were not able to push the general prices up:
- Other cereals, flour, cereal preparation, bread, pasta and other bakery products, 0.4 percent
- Oils and fats, 0.2 percent
- Sugar, jam, honey, chocolate and confectionery, 0.8 percent
Figure 3 presents the month-on-month inflation rates in October and September 2018 of Central Luzon.
In October 2018, the index of consumer items in Bulacan contracted by 0.2 percent. This recorded a 1.3 percent decrease from September 2018. Likewise, Aurora decelerated from 1.7 percent in September 2018 to 0.5 percent in October 2018. On the other hand, Zambales registered the highest month-on-month inflation rate at 0.8 percent which is only 0.1 percent decrease from what was posted in September 2018.
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 October 2018.
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
- 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.
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.