The Consumer Price Index in Northern Mindanao for the month of June 2020 registered at 127.1 which implies that the price of a basket of goods in June 2020 was 27.1 percent higher than its price in 2012. The Consumer Price Index is an indicator of the change in the average retail prices of a fixed basket of goods and services commonly purchased by households relative to a base year. Figure 1 shows the CPI for Northern Mindanao for May to June 2019 and May to June 2020.
Among the commodity groups, Alcoholic Beverages and Tobacco posted the highest CPI in June 2020 at 228.7, followed by Housing, Water, Electricity, Gas, and Other Fuels at 142.6, and Health at 133.8. On the other hand, Recreation and Culture at 114.8, Communication at 106.1 and Transport at 105.1 were the bottom three with the lowest CPI recorded in the month of June 2020 (Figure 2).
Table 1 presents the CPI for all commodity groups in Northern Mindanao by province for the month of June 2019 and June 2020. All provinces demonstrated an increase in CPI for June 2020 with Misamis Occidental posting the highest at 129.3 and Camiguin posting the lowest at 123.8.
Figure 3 shows the inflation rate for all items in Northern Mindanao from June 2019 to June 2020. The region’s inflation rate decreased by 2.2 percentage points, from 3.7 percent in the same period of last year to 1.5 percent at the current year. This means that prices of goods in June this year increased at a slower pace than its rate of increase in June 2019.
Among all provinces in Northern Mindanao, the province of Bukidnon posted the highest inflation rate at 3.2 percent, followed by Camiguin at 2.3 percent, and Lanao del Norte at 1.0 percent. Meanwhile, the provinces of Misamis Occidental and Misamis Oriental posted the lowest inflation rate at 0.9 percent in June 2020 (Table 2).
PURCHASING POWER OF PESO (PPP)
The Purchasing Power of Peso (PPP) shows the real value of the peso relative to the base period. The PPP in Northern Mindanao dropped to PhP 0.79 in June 2020. This means that a consumer’s PhP 100 in 2012 can only purchase PhP 79 worth of goods and services in June 2020.
All provinces in Northern Mindanao showed a lower PPP in June 2020 compared to June 2019, except for Lanao del Norte (Figure 4).
Among the June 2020 PPP of the provinces, Bukidnon posted the highest decline of 0.03 pesos followed by Camiguin which declined by 0.02 pesos. Misamis Occidental and Misamis Oriental also declined by 0.01 pesos while the PPP of Lanao del Norte in June 2020 remained the same.
RUBEN D. ABARO, JR., CESE
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.
Used of CPI – 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 data or base period is the benchmark or reference date or period at which the index is taken as equal to100.
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. Weighing System – The weighing pattern uses the expenditures on various consumer items purchased by households as a proportion to total expenditure.
d. Formula – 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 (2012) weights.
e. Geographic Coverage – CPI values are computed at the national, regional, and provincial levels, and for selected cities.
Inflation Rate (IR) – is the rate of change of the CPI expressed in percent. Inflation is interpreted in terms of declining purchasing power of peso.
Purchasing Power of Peso (PPP) – 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.