Inflation in the region plunged further to four-year low

Reference Number: 

SR-2019-045

Release Date: 

Saturday, November 23, 2019

Body: 

Average inflation rate in the region during the month of October this year plunged further to its four-year low level at negative 0.5. The latest inflation
is the below the lowest recorded rate in September 2015 at negative 0.3 and during that year, there were three consecutive months
where negative inflation was recorded that started in the month of August. In that same year, inflation rate during the month of October
was also recorded at negative 0.1, a little bit higher than the latest recorded inflation of the region.  

 

In general, inflation rate in the region for the past ten months diplayed a declining pattern and this holds true (and more apparent)
during the past five months when the month-to-month inflation  ticked down from 0.5 percentage points to as high as 1.5 percentage points. Last month, regional inflation falloff to its lowest positive value of 0.1 but further dwindle to its lowest ever negative value not only for the year
but for the past four years.

The regional inflation trend is akin to the national average inflation in the sense that the latter also displayed a decreasing pattern but unlike the former, the month-to-month national inflation is still above the zero mark although it also hit its lowest mark ever for the past ten months at 0.8 percent.

Across the region, three provinces displayed a downward inflation rate versus last month with the province of Cagayan showing the highest cut
from its last month level of 0.2 to negative 1.6 this month. This is the first time that the province of Cagayan showed the lowest inflation across provinces
in the region during the past ten months which is usually exhibited in the province of Quirino. Two provinces on the other hand maintained
its last month record but the rates recorded in those provinces were already at its lowest negative indicator ever. Specifically, the provinces of Isabela
and Quirino, both with inflation for the past wo months at negative 0.2 and negative 0.1 respectively, had these rates the lowest ever
for the past ten months. Moreover, the last time that negative inflation rates occured in the province of Isabela was in 2015 that runs from July
to October with the rate in October 2015 recorded at negative 0.6 percent, way below the rate record this year of the same month at negative 0.2.
Meantime, the occurrence of negative inflation in the province of Quirino is not new in its record as it established negative inflations in 2014 to 2017
with the lowest negative rate record reported in December 2014 at negative 2.4 percent.

Meanwhile, the province of Batanes still holds the highest inflation in the region at 4.6 percent. This is the two-month in a row since August 2019
that the province inflation slowed down after its erratic movement for the past eight months. Its latest inflation however, is still above the lowest inflation
recorded in June 2019 at 3.8 percent. Further, month-to-month inflation in the province of Nueva Vizcaya depicted a perfect declining movement
for the past ten months that started at more than six percent in January 2019 and the latest inflation at 0.1 showed a considerable decline
of more than six percent. Ergo, the above scenarios succinctly shaped the regional inflation trend.    

 

Seven regions displayed negative inflation in October 2019

Seven regions, including Cagayan Valley, displayed negative inflation during the month. Zamboanga Peninsula region exhibited the lowest inflation
at negative 1.3 percent, an 8.9 percentage points slashed from its 2018 recod of 7.6 percent. In the region, the latest inflation at negative 0.5 percent
is about 8.5 percentage points below its 2018 level, the fourth largest inflation cut from its last year level, tied with Davao region
in terms of inflation decrement from last year. Not surprising,  four regions with negative inflation this month were among the top five
in terms of inflation reduction from its 2018 inflation report, all with more than eight percentage points decrement.

Withal, inflation across regions slowed down during the month with the highest inflation reported in Central Luzon at 2.3 percent. The latest inflation
in the region is only 2.1 percentage points below its 2018 level, the least percentage points reduction across regions from last year’s report. In addition,
the current inflation in Central Luzon is 1.5 percentage points above the national average and 3.6 way above the lowest inflation reported
in Zamboanga Peninsula. It must be noted further that other regions with positive inflation during the month showed a modest inflation disparity
with inflation in the CALABARZON region trailing behind Central Luzon at 1.7 percent.   

In October 2018, the highest inflation was reported in Bicol region but its latest inflation at 0.7 percent is 9.2 percentage points below its 2018 level
of 9.9 percent. The region took the top spot in terms of year-on-year inflation decrease. Other regions with positive inflation during the month displayed
a year-on-year inflation decrement ranging from 4.0 to 7.7 percentage points.   

 

Alcoholic Beverages and Tobacco leading the price indices

Both Cagayan Valley and the national price index of Alcoholic Beverages and Tobacco nailed the highest CPI compared with the other commodity groups. The region’s CPI for this group is higher by 26.9 index points over that of the national CPI for the same
commodity group. All other commodity groups both in the region and the national average fell below 130.0
with Furnishing, Household Equipment and Routine Maintenance of the House CPI at 128.3
taking the highest second spot. The region’s CPI for this group is still above the national average by 7.5 index points.

Meanwhile, CPI for Education and Communication still displayed the lowest CPI across commodity groups
in the region while CPI for Communication and Transport at the national level. In particular, CPI for Education
in the region at 95.1 is 25.6 index points below the national average while CPI for Communication at 99.4,
is also 2.1 index points below the national average. On the other hand, national CPI average for Transport
at 106.4 is 3.8 index points higher than the regional average.

Across provinces during this month, Consumer Price Index (CPI) for all items at 124.5 was the highest in the region and this was captured
in the province of Isabela. The price index captured in the province during the month is 0.1 index points higher than last month and 0.2 index points
lower than last year of the same month. CPI for all items in Batanes at 123.5 took the second spot and this is lower by 1.1 index points
than what was recorded last month and higher by 4.8 index points over last year. CPI for all items in Quirino was still the lowest across regions
and maintained its position at the bottom at 116.3, up by 0.2 index points over last month
and down by 0.1 index points from last year’s level.  Cagayan province which has the lowest inflation
during the month registered a CPI for all items during the month at 120.3, below the last month
and last year’s level by 0.5 and 1.9 index points, respectively.

In terms of the CPI for Alcoholic Beverages and Tobacco which is the highest in the region and across provinces, CPI for the commodity in the province of Cagayan outmatch
all provinces with its record during the month at 281.8.
Quirino still reported the lowest CPI for the commodity at 194.4
while the other two provinces (Batanes and Nueva Vizcaya) recorded its CPI at 236.7 and 235.6, respectively.   

For CPI in Education, which was the lowest CPI across commodities in the region, Cagayan provinces
still registered the lowest at 73.8 while Batanes province posted the highest 200.9. The other
three provinces had its count at more than one hundred. Surprisingly, CPI for Education
in the province of Batanes is almost triple with that of the lowest CPI for the commodity and almost double with the CPI of the other three provinces  

 

Purchasing Power of Peso (PPP) weakens at P 0.82  

The average PPP in the region from January to August this year was P0.83 and became weaker at P0.82 during the past two months.
This means that the value of P1.00 in 2012 is only worth P0.82 in October 2019. 

Although two of the provinces caused the region’s weaker PPP this month, the provinces of Cagayan and Quirino maintained their peso value
from its last month report. PPP in Quirino province is still the strongest in terms of purchasing power with P0.86 while Batanes regained strength
at P0.81 this month from its previous PPP of P0.80.

 

 

 

MARILYN T. ESTRADA
Regional Director
 
 
//GMB / MJCC

 

Technical Notes

 

Consumer Price Index (CPI) is an indicator of change in the average retail prices of a fixed    basket of goods and services commonly purchased
by households relative to a base year. It measures how much on the average, prices of goods and services have increased or decreased
from a particular reference period. 

Purchasing Power of Peso (PPP) shows how much the peso in the base period is worth in another period. It gives an indication of the real value
of the peso in a given period relative to the peso value in the base period.  Purchasing Power of Peso (PPP) is inversely related to inflation rate.
Thus, as inflation rate increases, PPP declines.