BARMM Summary Inflation Report for August 2022
INFLATION RATES FOR ALL ITEMS
The headline inflation in BARMM increased further to 4.9 percent in August 2022, from 3.6 percent in July 2022. This is the highest recorded inflation since January 2022. Inflation in August 2021 was lower at 2.1 percent. The average inflation for the first eight months of the year stood at 2.6 percent (see Figure 1). It is shown in Table 1 that in August 2022, Lanao del Sur has the highest inflation rate among BARMM provinces, including HUC with 8.8 percent. All provinces had an increase inflation rates: Tawi-Tawi at 6.3 percent, Maguindanao at 4.7 percent, Cotabato City at 3.5 percent, Basilan at 3.7 percent and Sulu at 0.3 percent.
The increase in the region’s inflation was mainly brought about by the higher annual increase in the index for Restaurants and Accommodation Services at 5.8 percent, Food and Non-Alcoholic Beverages at 5.0 percent, and Alcoholic Beverages and Tobacco at 4.3 percent. Also contributing to the uptrend in the overall inflation during the period were the higher annual increments in the indices of the following commodity groups as compared with their previous month’s inflation rates:
- Education Services, 3.7 percent
- Furnishing, Household Equipment and Routine Maintenance of the House, 2.5 percent
- Personal Care, Miscellaneous Goods and Services, 2.4 percent
- Clothing and Footwear, 2.2 percent
- Recreation Sports and Culture, 2.2 percent
- Information and Communication, 1.4 percent
Meanwhile, annual upticks slowed down in the indices of Transport at 14.6 percent, Housing, Water, Electricity, Gas and Other Fuels at 3.4 percent and Health at 1.8 percent.
On the other hand, the commodity group of Financial Services retained their previous month’s inflation rate.
INFLATION RATES FOR FOOD ITEMS
For food index, it increased further by 5.0 percent in August 2022, from 3.0 percent in the previous month. In August 2021, food index was lower by 1.3 percent.
The increase in the region’s food inflation was mainly brought about by the higher annual increase in the index for Sugar, Confectionery and Desserts at 28.7 percent, Oils and Fats at 13.1 percent, and Meat and Other Parts of Slaughtered Land Animals at 10.7 percent. Also contributing to the uptrend in the overall inflation during the period were the higher annual increments in the indices of the following commodity groups as compared with their previous month’s inflation rates:
- Milk, Other Dairy Products, and Eggs, 5.0 percent
- Cereals and Cereal Products, 5.0 percent
- Vegetables, Tubers, Cooking Bananas and Pulses, 3.4 percent
- Ready-Made Food and Other Food Products N.E.C, 2.4 percent
On the other hand, Fruits and Nuts retained their previous month’s inflation rate while Fish and Other Seafood still registered an annual decline at -0.5 percent.
PURCHASING POWER OF PESO
Purchasing Power of Peso (PPP) is inversely related to inflation rate. Thus, as the inflation rate increases, PPP declines, as shown in Figure 2. In BARMM, PPP is at 0.87 as of July 2022. This is the lowest purchasing power of peso recorded since January 2022.
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 or reference 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 consumer items purchased by households as a proportion to total expenditure.
The formula used in computing the CPI is the weighted arithmetic mean of price relatives, the Laspeyre’s formula with a fixed base year period (2006) weights.
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 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 multiplied by 100
Note: The dataset used in the special release is exclusive for ARMM plus Cotabato City.