Consumer Price Index (CPI), Inflation Rate and Purchasing Power of Peso (PPP) of Tarlac, May 2022

Reference Number: 

2022-014

Release Date: 

Wednesday, June 8, 2022

Tarlac’s CPI was at 117.3 in May 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 117.3 as of May 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 May 2018 at Php100.00, needs an additional Php17.3 in May 2022. The CPI in May 2022 was recorded at 117.3 and in May 2021 at 111.0 using 2018 as the base year. See Figure 1.

Table 1. Consumer Price Index (CPI) By Commodity Group:
Tarlac (2018=100)

In May 2022, commodities under Alcoholic Beverages and Tobacco recorded the highest CPI at 181.7. This was followed by the commodity groups of Financial Services at 146.0, followed by the commodity groups of Transport at 138.9, Furnishings, Household, Equipment and Routine Household Maintenance at 121.6, Health at 117.5, and the commodity group of Housing, Water, Electricity, Gas, and Other Fuels at 117.3. On the other hand, CPIs lower than the provincial average was observed in the commodity groups: Recreation, Sport and Culture at 115.4, Clothing and Footwear at 113.5, Restaurants and Accommodation Services at 112.9, Personal Care, and Miscellaneous Goods and Services at 111.8, Food and Non-Alcoholic Beverages at 111.5, Information and Communication at 105.0, and Education Services at 98.9. See Table 1.

Tarlac’s Inflation at 5.7% and Purchasing Power of Peso at Php 0.85 in May 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 5.7% in May 2022 compared to the 4.8% in April 2022. The inflation rate was 6.1% in May 2021. The purchasing power of peso in the province is 85 centavos for the month of May 2022.

This implies that if you paid Php15.00 for a can of sardines in May 2021 and if on average, prices went up by 5.7% after a year’s time, you will now need Php15.86 to buy the same brand of a can of sardines in May 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 May 2022 was observed in the indices of seven out of thirteen commodity groups: Transport (12.7%), Housing, Water, Electricity, Gas, and Other Fuels (11.7%), Alcoholic Beverages and Tobacco (8.9%). These commodity groups were higher than the provincial average of 5.7%. On the other hand, the commodity groups lower than the provincial average of 5.7% are the Recreation (5.4%), Heath (5.0%), Furnishings, Household, Equipment and Routine Household Maintenance (4.6%), Food and Non-Alcoholic Beverages (3.9%), Clothing and Footwear (3.7%), Personal Care, and Miscellaneous Goods and Services (3.2%), Information and Communication (1.6%), Education Services (0.0%) and Financial Services (0.0%).

However, negative inflation was recorded in the indices of Restaurants and Accommodation Services (-0.7%). 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 groups:

• Fruits and Nuts (-9.9%)
• Water (-4.2)
• Milk, other dairy products, and eggs (-0.6%)

Meanwhile, Vegetables, tubers, plantains, cooking bananas and pulses (26.3%), Oils and fats (21.4%), Sugar, confectionery and desserts (12.0%), Ready-made food and other food products (6.7%), and Soft drinks (6.2%) had the highest inflation rates, higher than 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 0.85

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 May 2022 was 0.85. This implies that the Php1.00 in May 2018, as the base year, values only Php0.85 in May 2022. The PPP during the same month of 2021 was 0.90. The PPP recorded in April 2022 was 0.86. See Figure 2.

Technical Notes

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.

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