INFLATION RATE IN

THE PHILIPPINES
ACTIVITY 6
Inflation
What is inflation?

• Inflation is the decline of purchasing power of a given

currency over time. A quantitative estimate of the rate at
which the decline in purchasing power occurs can be
reflected in the increase of an average price level of a
basket of selected goods and services in an economy over
some period of time. The rise in the general level of prices,
often expressed a apercentage means that a unit of
currency effectively buys less than it did in prior periods.
The Philippines' inflation rate spiked to
4.7% in February 2021, the highest since
the 4.4% recorded in January 2019.It is
also the 5th straight monthly increase,
and follows the 4.2% inflation rate in
January 2021.A year ago, in February
2020, the rate of increase in the prices of
goods was only at 2.6%.
National Statistician Dennis Mapa said on Friday, March 5,
that the uptick was mainly caused by the increase in meat
prices, which had an inflation rate of 20.7% in February 2021
from 17.1% in January 2021.

In particular, pork prices have been surging. Hog raisers

attributed this to the African swine fever outbreak.
• President Rodrigo Duterte imposed a 60-day price
ceiling on pork and chicken prices starting
February, but it backfired, instead prompting
vendors to stop selling.

But economists from the academe have urged

Duterte to scrap the price ceiling, pointing out that it
is not solving the problem of high prices.
 Why food cost are rising and price ceilings
may not work?
Vegetables posted a lower inflation rate of 16.7% in
February, compared to 21.2% in January. But vegetable
prices still largely contributed to the food and non-alcoholic
beverages index.
Mapa also noted 5.1% inflation for fish in February, higher
than the 3.7% in January.
Aside from food, transport was the second major driver of
inflation, at 10.4% in February from 8.7% in January.
In particular, tricycle fares at 46.6%, jeepney fares at 6.3%,
and bus fares at 4.6% pushed up the transport index.
Housing, water, electricity, gas, and other fuels also posted
higher inflation of 0.9% in February, compared to 0.5% in
January.
 Regions, poorest households
• Inflation in the National Capital Region (NCR) slightly went down to 4.1% in February from 4.3% in January.

• But inflation in areas outside NCR climbed to 4.8% from 4.2%.

• Cagayan Valley's inflation rate slightly decreased to 7.9% from 8%, but it continues to have the highest
inflation among regions.

• In contrast, Central Visayas' inflation rate rose to 1% from 0.6%, but it has the lowest inflation.

• For the bottom 30% income households, inflation jumped to 5.5% in February, compared to 4.9% in January.
Mapa said this is the highest recorded for this group since January 2019.

• The surge for the poorest households was driven by food and non-alcoholic beverages, 5.6%; restaurant and
miscellaneous goods and services, 4.1%; and transport, 19.2%.
 Beyond expected yearly average

• The Bangko Sentral ng Pilipinas (BSP) earlier projected that

February 2021 inflation would settle within the 4.3% to 5.1% range,
citing higher global crude oil prices and fish prices.
• Year-to-date, inflation stands at 4.5%.
• The BSP expects inflation to average at 4% in 2021, based on its
latest forecast issued February 11. This is considerably higher than
the 3.2% projected last December 17. – Rappler.com
 Philippine inflation quickens to 4.2 percent in January

• The Philippine Statistics Authority (PSA) said the consumer price index rose at a faster
annual pace of 4.2 percent last month, its highest since the 4.4 percent inflation seen in
January 2019.
• This was above the Bangko Sentral ng Pilipinas' forecast range of 3.3 percent to 4.1
percent.
• Pork prices have risen as the African swine fever (ASF) decimated hog populations across
Luzon, while chicken prices have also gone up as supplies dwindled with many poultry
farms gone bankrupt last year.
• Pork prices rose 17.1 percent in January, PSA said.

• Prices rose even faster in the National Capital Region, which saw 4.3 percent inflation.
Statistics
 GLOBAL FOOD INFLATION FEARS GROW AS UN INDEX HITS 6.5-YEAR HIGH

• The Philippines stands out among major Southeast Asian economies for seeing prices of
commodities continue to rise. Other countries are even seeing deflation as the COVID-19
pandemic depressed demand.
• The BSP viewed the latest data uptick as "transitory," keeping its 2 to 4 percent target for
inflation for this year and next year.
• "The projected uptrend in inflation is seen to be temporary. The sources of near-term
inflation pressures are supply-side shocks in nature that should not require a monetary
policy response unless they lead to further second-round effects," the central bank said.
 GLOBAL FOOD INFLATION FEARS GROW AS UN INDEX HITS 6.5-YEAR HIGH

• Supply-side constraints are best solved by non-monetary interventions, the BSP said, such as
measures to ease logistics bottlenecks and make commodities more available to the
markets. 

 Agri dept to help in hog shipments to Metro Manila

• The BSP is set to meet on Feb. 11 to make its first monetary policy decision this year. 

• BPI’s chief economist Jun Neri, meanwhile, said the Philippines is at risk of "stagflation" in a
recession if inflation remains at 4 percent, above targets, for the whole year.
 Stagflation
• Stagflation is a scenario where inflation is high amid slow economic growth and a steadily high
unemployment rate.

• Neri is expecting inflation to rise further throughout 2021 on services, commodities such as corn,
and rising global oil prices.

• This will halt policy rate cuts from the BSP, and instead, a rate hike is now "in the realm of
possibility," he said.

• Benign inflation last year allowed the BSP to cut its policy rate by 200 basis points to a record low of
2 percent to support the economy, which saw its worst contraction since World War 2. 

• While the central bank at the start of the year said that inflation was the least of its worries, it later
said inflation may quicken in January.
Summary Inflation Report Consumer Price Index
(2012=100): January 2021
• Headline inflation in the Philippines continued its uptrend as it went up further to
4.2 percent at the beginning of 2021. This is the highest inflation recorded since
February 2019.
• Inflation in December 2020 was posted at 3.5 percent, while in January 2020, 2.9
percent.
• The overall inflation was primarily pushed up by the higher annual increment of the
heavily-weighted food and non-alcoholic beverages at 6.2 percent during the
month, from 4.8 percent in December 2020.
• Also contributing to the uptrend in the country’s inflation were the higher annual
increases in the indices of transport at 8.6 percent, and restaurant and
miscellaneous goods and services at 3.0 percent.
• Meanwhile, inflation decelerated in the indices of alcoholic beverages and tobacco at 11.7
percent, and furnishing, household equipment and routine maintenance of the house at 2.9
percent.
• The rest of the commodity groups retained their previous month’s annual rates, except for
recreation and culture whose annual rate decreased further by -0.7 percent during the month.
• Excluding selected food and energy items, core inflation picked up by 3.4 percent in January
2021. Core inflation in December 2020 and in January 2020 was both registered at 3.3 percent.
• Inflation for food index at the national level jumped to 6.6 percent in January 2021, from 4.9
percent in December 2020. In January 2020, inflation for food stood at 2.1 percent.
• The indices of meat and vegetables both registered double-digit
annual increments of 17.1 percent and 21.2 percent,
respectively. In addition, faster annual increases were recorded
in the indices of the following food groups:

 Corn, 1.6 percent;

 Other cereals, flour, cereal preparation, bread,  pasta and other

bakery products, 2.1 percent;

 Fish 3.7 percent;

 Oils and fats, 2.9 percent; and

 Fruits, 9.0 percent.

Statistics
 National Capital Region (NCR)

• Inflation in NCR rose to 4.3 percent in January 2021, from 3.2 percent in December 2020.
Inflation in the area in January 2020 was posted at 2.7 percent. The 8.3 percent annual
growth in food and non-alcoholic beverages index primarily pushed up the inflation in the
area.  In addition, the annual rate of housing, water, electricity, gas, and other fuels index
picked up by 0.4 percent during the month, from an annual decline of -0.6 percent in
December 2020. Higher double-digit annual hikes were also observed in the indices of
alcoholic beverages and tobacco at 10.5 percent and transport at 11.3 percent.
• The rest of the commodity groups either had slower annual increases or retained their
previous month’s annual rates, except for recreation and culture whose annual rate
declined further by -0.5 percent.
 Areas Outside NCR (AONCR)

• Similar to the trend of the national level and NCR, inflation in AONCR went up further  to 4.2
during the month, from 3.7 percent in December 2020. Inflation in the area in January 2020
was posted at 3.0 percent.
• The acceleration in the inflation in AONCR was mainly due to the 1.3 percentage points jump
in the inflation of food and non-alcoholic beverages, registering at 5.8 percent during the
month, from 4.5 percent in the previous month. Annual increments were also higher in the
indices of transport at 7.8 percent, and restaurant and miscellaneous goods and services at
3.6 percent. 
 Areas Outside NCR (AONCR)

• On the other hand, inflation slowed down for alcoholic beverages and tobacco at 12.0
percent; housing, water, electricity, gas, and other fuels, 0.5 percent; and furnishing,
household equipment and routine maintenance of the house, 2.4 percent. Except for
recreation and culture which exhibited an annual drop of -0.7 percent, the rest of the
commodity groups retained their previous month’s annual growth rates during the period.
• Twelve regions in AONCR exhibited higher inflation in January 2021. The highest inflation
among the regions in AONCR during the month remained in Region II (Cagayan Valley) at 8.0
percent, while the lowest was recorded in Region IX (Zamboanga Peninsula) at 0.2 percent.
SUBMITTED BY:

John Billy Rubio

Camille Florentine Faulan
Kiel Luching

A GROUP ACTIVITY IN MEDIA AND INFORMATION LITERACY

REFERENCES :

https://www.rappler.com/business/inflation-rate-philippines-february-2021
https://business.inquirer.net/316817/high-inflation-seen-spilling-over-to-january-2021
https://news.abs-cbn.com/business/02/05/21/philippine-inflation-quickens-to-42-perc
ent-in-january
https://psa.gov.ph/statistics/survey/price/summary-inflation-report-consumer-price-in
dex-2012100-january-2021