Central Luzon’s Inflation Rate for Bottom 30 Percent Income Households Continuously Slowed Down to 9.0 Percent
A continuous decrease of Central Luzon’s inflation rate for bottom 30 percent income households was recorded in March 2023 at 9.0 percent from
10.5 percent in February 2023, recording a 1.5 percentage points decrease in its year-on-year comparison. (Refer to Figure 1)
Central Luzon was sixth among regions in the country with the highest inflation rate for bottom 30 percent income households in March 2023.
Davao Region recorded the highest inflation at 11.1 percent followed by Zamboanga Peninsula at 10.3 percent. Meanwhile, Bicol Region posted the lowest inflation at 7.2 percent.
The headline inflation for bottom 30 percent income households in the Philippines decreased from 9.7 percent in February 2023 to 8.8 percent in
Figure 2 shows the annual inflation rates of the different regions in the Philippines in March 2023.
Contributors in the slowdown of March 2023 Inflation for Bottom 30% Income Households were the lower annual increments in the indices of transport at 9.5 percent from 12.8 percent in February 2023, followed by housing, water, electricity, gas and other fuels at 6.1 percent from 8.0 percent in the previous month, food and non-alcoholic beverages at 9.9 percent from 11.7 percent in February 2023, and Restaurants and Accommodation Services at
7.6 percent from 8.2 percent in February 2023. (Refer to Table A)
However, higher annual increments were recorded in the following indices:
• Alcoholic Beverages and Tobacco, 17.4 percent;
• Furnishings, Household Equipment and Routine Household Maintenance, 8.7 percent;
• Health, 4.6 percent;
• Recreation, Sport and Culture, 9.0 percent; and
• Personal care, and miscellaneous goods and services, 8.7 percent.
Moreover, same annual increments were noted in the following indices:
• Clothing and Footwear, 8.1 percent;
• Information and Communication 0.7 percent; and
• Education Services, 1.3 percent.
While financial services continued to record zero inflation for the month of March 2023.
The annual growth rate in the regional food index also slowed down to 10.0 percent in March 2023 from 12.1 percent in February 2023. The downward trend in the food index could be primarily attributed to the lower increments in the annual growth rate of the following food indices (Refer to Table B):
- Vegetables, Tubers, Cooking Bananas and Pulses, 18.7 percent;
- Oils and Fats, 24.2 percent;
- Meat and Other Parts of Slaughtered Land Animals,1.8 percent;
- Sugar, Confectionery and Desserts, 32.3 percent;
- Milk, Other Dairy Products, and Eggs, 22.2 percent; and
- Ready-Made Food and Other Food Products N.E.C., 12.2 percent.
Meanwhile, higher annual increments were noted in the following indices:
- Rice, 2.7 percent;
- Corn, 17.9 percent;
- Flour, Bread and Other Bakery Products, Pasta Products, and Other Cereals,15.6 percent;
- Fish and other seafood, 9.6 percent; and
- Fruits and nuts, 18.1 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 2023.
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 of CPI is rebased from base year 2012 to base year 2018.
b. Market Basket
Market basket refers to a sample of goods and services commonly purchased by the households.
The market basket for the CPI for All Income Households is updated using the results of the 2021 Survey of Key Informants (SKI). The survey, which was undertaken in March 2021, was conducted nationwide to store managers, sellers, or proprietors, to obtain information on the most commonly purchased goods and availed of services by the households.
The commodities included in the 2018-based CPI market basket are the modal commodities which were considered as the most commonly purchased/availed of commodities by the households.
The commodities in the 2018-based CPI market basket are grouped/classified according to the 2020 Philippine Classification of Individual Consumption According to Purpose (PCOICOP) which is based on the United Nations COICOP. Meanwhile, the commodities in the 2012-based CPI market basket used the 2009 PCOICOP version of classification of commodities.
Table 1 below presents the comparison of the commodity classification based on 2009 and 2020 PCOICOP which are adopted in the 2012-based and 2018-based CPI market baskets, respectively.
c. Weighting System
The weights for the 2018-based CPI were derived from the expenditure data of the 2018 Family Income and Expenditure Survey (FIES). The weight for each commodity/group of commodities is the proportion of the expenditure of the expenditure of commodity/group of commodities to the total national expenditure. The sum of the weights of the commodity groups at the national level is equal to 100.
d. Geographic Coverage
CPI values are computed at the national, regional, and provincial levels, for selected cities. A separate CPI for NCR is also computed.
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.