The deceleration of the annual inflation rate in January 2023 was primarily brought about by the lower annual increase in the Food and non-alcoholic beverages index at 12.1 percent, from 13.7 percent in December 2022. Lower annual hikes were also observed in the indices of furnishings, household equipment, and routine maintenance of the house at 1.3 percent; and transport at 6.5 percent.

On the other hand, higher annual hikes were noted in the indices of the following commodity groups during the month of January 2023:

a. Alcoholic beverages and tobacco, 8.5 percent;
b. Clothing and footwear, 4.1 percent;
c. Housing, water, electricity, gas, and other fuels, 7.2 percent;
d. Health, 1.5 percent;
e. Recreation, sports, and culture, 6.4 percent;
f. Restaurants and accommodation services, 17.8 percent; and
g. Personal care and miscellaneous goods and services, 6.3 percent.

The indices of information and communication, and education services had retained their recorded rates in December 2022 at 0.1 and 1.3 percent, respectively, while the financial services index recorded zero percent annual inflation rate in January 2023. (See Table 1)

Meanwhile, inflation for food slowed to 12.2 percent during the month of January 2023, from 14.1 percent in December 2022. In January 2022, it was mainly brought about by cereals and cereal products (7.5%), fish and other seafood (8.2%), milk, other dairy products, and eggs (19.1%), vegetables, tubers, cooking bananas and pulses (17.2%), and sugar, confectionery and desserts (39.8%).

The indices of information and communication, and education services had retained their recorded rates in December 2022 at 0.1 and 1.3 percent, respectively, while the financial services index recorded zero percent annual inflation rate in January 2023. (See Table 1)

Meanwhile, inflation for food slowed to 12.2 percent during the month of January 2023, from 14.1 percent in December 2022. In January 2022, it was mainly brought about by cereals and cereal products (7.5%), fish and other seafood (8.2%), milk, other dairy products, and eggs (19.1%), vegetables, tubers, cooking bananas and pulses (17.2%), and sugar, confectionery and desserts (39.8%).

The following indices, on the other hand, recorded an increase in January 2023:

a. Meat and other parts of slaughtered land animals, 16.9 percent;
b. Oils and fats, 13.3 percent;
c. Fruits and nuts, 6.6 percent; and
d. and ready-made food and other food products not elsewhere classified, 6.6 percent.
(See Table 1a, p. A-1)

(Sgd.) FRANCISCO C. GALAGAR JR.
Chief Statistical Specialist

Technical Notes

This Special Release presents the results of the Survey of Retail Prices of Commodities and Services for the Generation of Consumer Price Index (CPI) conducted in January 2023.

CPI

The CPI is an indicator of the change in the average retail prices of a fixed basket of goods and services commonly purchased by households for their day-to-day consumption relative to a base year.

Uses of the CPI

As an indicator, the CPI is most widely used in the calculation of the inflation rate and purchasing power of the peso. It is a major statistical series used for economic analysis and as monitoring indicator of government economic policy.

The CPI is also used as a deflator to express value series in real terms, which is, measuring the change in actual volume of transactions by removing the effects of price changes. Another major importance of the CPI is its use as basis to adjust wages in labor management contracts as well as pensions and retirement benefits. The CPI also serves as inputs in wage adjustments through the collective bargaining agreements.

Components of the CPI

a. Base Period

This is a reference date or simply a convenient benchmark to which a continuous series of index numbers can be related. Since the CPI measures the average changes in the retail prices of a fixed basket of goods, it is necessary to compare the movement in previous years back to a reference date at which the index is taken as equal to 100.

The present series uses the 2018 as the base year. The year 2018 was chosen as the base year because it is the year when the Family Income and Expenditure Survey (FIES) was conducted. The FIES is the basis of the CPI weights.

b. Market Basket

Market basket refers to a sample of thousands of varieties of goods purchased for consumption and services availed by the households in the country. It was selected to represent the composite price behaviour of all goods and services purchased by the consumers.

c. Weighting System

The weighting system is a desirable system that considers the relevance of the components of the index. For the CPI, the weighting pattern uses the expenditures on various consumer items purchased by households as a proportion to total expenditures.

d. Geographic Coverage

CPI values are computed at the national, regional, and provincial levels, and for selected cities. A separate CPI for NCR is also computed.

e. Classification Standards

The 2012-based CPI series is the first in the series that used the 1999 United Nations Classification of the Individual Consumption According to Purpose (COICOP) in determining the commodity groupings of the items and services included in the market basket. The 2018-based CPI also follows the Philippine Standard Geographic Classification codes.

Inflation Rate

The inflation rate (IR) is the annual or monthly rate of change of the CPI in percent. It is interpreted in terms of declining purchasing power of money.