Explainer: How does inflation affect the Filipinos?

Explainer: How does inflation affect the Filipinos?

- In a recent report, inflation rate surged to 6.4%

- Inflation rate can be measured by consumer price index (CPI)

- It urges Filipinos to work harder to maintain their cost of living

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Inflation in Philippine economy has accelerated drastically this year. It has been recently reported by Rappler that the inflation rate has increased from July’s record of 5.7% to 6.4%. The surge in prices of goods has alarmed all of the consumers.

What is inflation?

Inflation is the increase of prices of goods and services. This also means an increase in one’s cost of living.

Inflation also means the decrease of purchasing power in unit of a currency. On that note, Philippine peso’s value has been reducing which is an alarming sign to the country’s performance in economy.

The goods and services included are:

• Food and restaurants

• Non-alcoholic and alcoholic beverages

• Tobacco

• Housing, electricity, water and gas

• Health

• Transport

• Communication

• Education

• Clothes at footwear

• Culture and recreation

• Furnishing and house equipment

• Miscellaneous goods and services

How is it measured?

Every first week of the month, the Philippine Statistics Authority (PSA) releases information to let the public know the changes in prices of goods.

In order to measure the inflation rate, statisticians and experts observe the regular consumption of goods and services by Filipinos or the consumer price index (CPI). The annual changes in CPI will then be used to determine the inflation rate.

What are the factors of inflation?

According to Investopedia, the major causes of inflation are supply and demand. Cost-push inflation is when the cost of goods and materials needed to produce supplies and wages are high, making it harder to produce goods while the demand is still consistent.

However, another major factor could be the demand-pull inflation which happens when demand surpasses the supply needed for producing goods.

How does it affect the Filipinos?

When inflation occurs, it means Filipinos have to spend more money for their consumption. This has become a challenge for families to maintain their cost of living.

The inflation that has been happening in the country urges Filipinos to work harder just to survive another day. Many have been fighting for salary increase in order to sustain their consumption.

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Source: Kami.com.ph

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