PRICE SITUATION: Year-on-Year
The Consumer Price Index (CPI) for all income household in Abra for May 2022 is 112.3. This implies that a household in Abra needs 12.3 pesos to purchase the same basket of goods worth 100 pesos in 2018.
This month’s CPI for all items is 4.8 higher than last years’s index. Changes in the prices of different commodities determine the fluctuations in the monthly CPI.
Transport recorded the highest price changes with a 22.1 percent increase. It is followed by Housing, Water, Electricity, Gas and Other Fuels with 6.7 percent and Alcoholic Beverages and Tobacco with 6.2 percent
All other commodities groups increased in prices, except the Clothing and Footwear commodity group which decreased by 0.4 percent.
Inflation Rate (IR)
Figure 2 below shows a difference of 2.1 percent increase on year-on-year comparison between May 2021 with 2.4 and May 2022 with 4.5 inflation rates, and a 0.9 percent increase compared to April 2022 with 3.6 inflation rate.
Figure 3 shows the trend of inflation rate in the province for the period May 2021 to May 2022. Inflation rate posted the least in January 2022 with 1.2 percent while its highest inflation rate was observed in September 2021 with 4.9 percent.
Concepts and Definitions
Consumer Price Index (CPI)
The 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.
Uses of CPI
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 government economic policy.
Computation of 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 orreference date or period at
which the index is taken as equal to 100.
b. Market Basket- A sample of the thousands of varieties of goods purchased for consumption and
services availed by the households in the country selected to represent the composite price behavior of all
goods and services purchased by consumers.
c. Weighting System- The weighting pattern uses the expenditures on various consumers’ items purchased
by households as a proportion to total expenditure.
d. Formula-The formula used in computing the CPI is the weighted arithmeticmean of price relatives, the
Laspeyre’s formula with a fixed based year period (2006) weights.
Inflation Rate is the rate of change of the CPI expressed in percent. Inflationis interpreted in terms of
declining purchasing power of peso.
Headline Inflation refers to the rate of change in the CPI, a measure of theaverage 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 multiplied by 100.