Inflation Rate for Central Luzon’s Bottom 30 Percent Income Households Accelerated to 6.1 Percent

Central Luzon’s inflation rate for the bottom 30 percent income households accelerated to 6.1 percent in July 2024 from 5.6 percent in June 2024. This was a 0.5 percentage point higher than June 2024 and 0.1 percentage point higher than July 2023 inflation rate. (Figure 1)

Across regions, Central Luzon ranked sixth with the highest inflation rate for bottom 30 percent income households in July 2024. Central Visayas recorded the highest inflation rate at 7.7 percent, followed by Northern Mindanao and Zamboanga Peninsula at 7.1 percent and 6.8 percent, respectively. Meanwhile, Ilocos Region registered the lowest inflation rate at 4.6 percent. (Figure 2)

Furthermore, the headline inflation for bottom 30 percent income households in the Philippines accelerated from 5.5 percent in June 2024 to 5.8 percent in July 2024.

Figure 2 shows the annual inflation rates of the different regions in the Philippines in June 2024.

The acceleration in inflation rate for bottom 30 percent income households in Central Luzon could be attributed to the faster increments in the indices of education services at 10.4 percent in July 2024 from 7.0 percent in June 2024, housing, water, electricity gas and other fuels at 7.6 percent in July 2024 from 3.7 percent in June 2024, and transport at 3.4 percent in July 2024 from 3.0 percent in June 2024.

On the other hand, slower annual increments were recorded in the following indices:
•    alcoholic beverages and tobacco, 3.4 percent from 3.8 percent;
•    clothing and footwear, 3.6 percent from 3.9 percent;
•    furnishings, household equipment and routine household maintenance, 2.5 percent from 3.1 percent; 
•    health, 2.4 percent from 3.1 percent;
•    information and communication, 0.3 percent from 0.4 percent;
•    recreation, sport and culture, 6.2 percent from 7.2 percent; and
•    restaurants and accommodation services, 4.9 percent from 5.3 percent.

Moreover, the indices of food and non-alcoholic beverages (7.5%), financial services (-0.1%), and personal care, and miscellaneous goods and services (3.9%) recorded the same inflation in July 2024 from June 2024. (Table 1)
 

The annual growth rate in the regional food index recorded the same in June 2024 and July 2024 at 8.0 percent.

Meanwhile, faster increments were recorded in the food indices of corn at 14.1 percent in July 2024 from 3.9 percent in June 2024, fruits and nuts at 7.6 percent in July 2024 from 3.7 percent in June 2024, meat and other parts of slaughtered land animals at 6.0 percent in July 2024 from 3.6 percent in June 2024, and ready-made food and other food products n.e.c. at 5.9 percent in July 2024 from 5.5 percent in June 2024.

On the other hand, slower annual increments were recorded in the following:
•    rice, 23.5 percent from 26.7 percent;
•    flour, bread and other bakery products, pasta products, and other cereals, 3.3 percent from 4.0 percent; and
•    vegetables, tubers, cooking bananas and pulses, 8.3 percent from 11.1 percent;

Moreover, slower deceleration were recorded in the food indices of fish and other seafood (-1.1% from -2.0%), milk, other dairy products, and eggs (-0.1% from -2.5%), and oils and fats (-5.8% from -6.2%).

Furthermore, faster deceleration was recorded in the food index of sugar, confectionery and desserts (-2.2% from -1.8%) (Table 2)

Among the provinces and Highly Urbanized Cities (HUCs) in the region, Nueva Ecija registered the highest inflation rate for bottom 30 percent income households at 7.9 percent, followed by Bulacan at 6.2 percent, and Pampanga and City of Olongapo at 5.9 percent. Meanwhile, Zambales had the lowest inflation rate for the bottom 30 percent income households at 3.6 percent. (Figure 3)

ARLENE M. DIVINO
Regional Director 
PSA RSSO 03

Technical Notes

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 July 2024.  

CPI    

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 A 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.

Inflation Rate

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.