Tarlac’s CPI was at 120.5 in July 2022
Consumer Price Index (CPI) is an indicator of the changes in the average retail prices of a fixed basket of goods and services commonly purchased by households relative to a base year. The CPI is most widely used in the calculation of the inflation rate and purchasing power of peso. It is a major statistical series used for economic analysis and as a monitoring indicator of the government’s economic policy.
The Survey of Retail Prices of Commodities conducted by the Philippine Statistics Authority (PSA) has generated a CPI of 120.5 as of July 2022 for the province of Tarlac, using 2018 as the base year. This means that for a typical Filipino household in the province to afford the same values of goods and services in July 2018 at Php100.00, needs an additional Php20.5 in July 2022. The CPI in July 2022 was recorded at 120.5 and in July 2021 at 111.6 using 2018 as the base year. See Figure 1.
Table 1. Consumer Price Index (CPI) Commodity Group: Tarlac (2018=100)
In July 2022, commodities under Alcoholic Beverages and Tobacco recorded the highest CPI at 185.4. This was followed by the commodity groups of Transport at 147.0, followed by the commodity groups of Financial Services at 146.0, followed by the commodity group of Furnishings, Household, Equipment, and Routine Household Maintenance at 122.2, and the commodity group of Housing, Water, Electricity, Gas, and Other Fuels at 121.8. On the other hand, CPIs lower than the provincial average was observed in the commodity groups: Health at 118.9, Recreation, Sport, and Culture at 117.6, Restaurants and Accommodation Services at 114.8, Food and Non-Alcoholic Beverages at 114.5, Clothing and Footwear at 113.4, Personal Care, and Miscellaneous Goods and Services at 112.3, Information and Communication at 105.1, and Education Services at 98.9. See Table 1.
Tarlac’s Inflation at 8.0% and Purchasing Power of Peso at Php 0.83 in July 2022
Inflation rate is the annual rate of change, or the year-on-year change of the CPI expressed in percent. Inflation is interpreted in terms of declining purchasing power of money.
The inflation rate in the province of Tarlac went up to 8.0% in July 2022 compared to 7.3% in June 2022. The inflation rate was 6.1% in July 2021. The purchasing power of peso in the province is 83 centavos for the month of July 2022.
This implies that if you paid Php15.00 for a can of sardines in June 2021 and if on average, prices went up by 7.3% after a year’s time, you will now need Php16.20 to buy the same brand of a can of sardines in July 2022. See Table 2.
Table 2. Year-on-Year Inflation Rate (All Items) and Purchasing Power of Peso (PPP) Tarlac (2018=100)
The highest inflation among the commodity groups in July 2022 was observed in the indices of seven out of thirteen commodity groups: Transport (16.7%), Housing, Water, Electricity, Gas, and Other Fuels (14.0%), Alcoholic Beverages and Tobacco (11.2%). These commodity groups were higher than the provincial average of 8.0%. On the other hand, the commodity groups lower than the provincial average of 8.0% are Food and Non-Alcoholic Beverages (7.0%), Recreation, Sport and Culture 6.9%), Furnishings, Household, Equipment and Routine Household Maintenance (4.9%), Personal Care, and Miscellaneous Goods and Services (3.6%), Heath (2.7%), Clothing and Footwear (2.4%), Information and Communication (1.2%), Restaurants and Accommodation Services (1.0%), Education Services (0.0%) and Financial Services (0.0%). See Table 3.
Table 3. Year-on-Year Inflation Rate (All Items) and Purchasing Power of Peso (PPP) Tarlac (2018=100)
On selected food and non-alcoholic beverages items, negative inflation was recorded in the following group:
• Fruits and Nuts (-0.6%)
Meanwhile, Sugar, confectionery and desserts (22.8%), Oils and fats (21.7%), Ready-made food and other food products (9.2%), Vegetables, tubers, plantains, cooking bananas and pulses (8.3%), and Fish and Other Seafood (8.0%) had the highest inflation rates, higher than or equal to the average Inflation Rate. See Table 4.
Table 4. Consumer Price Index (CPI) and Inflation Rates of Selected Food and Non-Alcoholic Beverages Items: Tarlac: (2018=100)
Purchasing Power of Peso (PPP) remained at 0.83
Purchasing Power of Peso (PPP) shows how much the peso in the base period is worth in the current period. It is computed as the reciprocal of the CPI for the period under review multiplied by 100. The PPP is inversely related to the inflation rate. Thus, as the inflation rate increases, PPP declines.
The PPP in July 2022 was 0.83. This implies that the Php1.00 in July 2018, as the base year, values only Php0.83 in July 2022. The PPP during the same month of 2021 was 0.90. The PPP recorded in June 2022 was 0.84. See Figure 2.
Computation of Consumer Price (CPI)
The computation of the CPI involves consideration of the following important points:
a. Base Period – The reference date or base period is the benchmark or reference date or period at which the index is taken as equal to 100.
b. Market Basket – A sample of the thousand varieties of goods purchased for consumption and services availed by the households in the country selected to represent the composition price behavior of all goods and services purchased by consumers.
c. Weighting System – The weighting pattern uses the expenditures on various consumer items purchased by households as a proportion to total expenditure.
d. Formula – The formula used in computing the CPI is the weighted arithmetic mean of prices relatives, the Laspeyre’s formula with a fixed base year period (2006) weight.
e. Geographic Coverage – CPI values are computed at the national, regional, and provincial levels, and for selected cities.
Inflation Rate is the rate of change of the CPI expressed in percent. Inflation is interpreted in terms of the declining purchasing power of peso.
Headline Inflation refers to the rate of change in the CPI, a measure of the average standard “basket” of goods and services consumed by a typical family.
Purchasing Power of Peso shows how much the peso in the base period is worth in the current period. It is computed as the reciprocal of the CPI for the period under review multiplies by 100.