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    Consumers Price Index, PPP

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    Teresita Balgos
    The document discusses the Consumer Price Index (CPI) and inflation rates in the Philippines. It provides the following key points: - The CPI is a statistical measure used to determine the average change in prices over time of goods and services in a fixed market basket that represents consumer spending. - Inflation is a general increase in prices for goods and services in an economy over time. The CPI is used to measure inflation. - From 1995 to 2010, the average annual inflation rate in the Philippines ranged from 2.8% to 9.3%, with monthly rates varying during the year. - High inflation decreases the purchasing power of the Philippine peso, while low inflation increases its purchasing power

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    © All Rights Reserved
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    Consumers Price Index, PPP

    Uploaded by

    Teresita Balgos
    383 views14 pages
    The document discusses the Consumer Price Index (CPI) and inflation rates in the Philippines. It provides the following key points: - The CPI is a statistical measure used to determine the average change in prices over time of goods and services in a fixed market basket that represents consumer spending. - Inflation is a general increase in prices for goods and services in an economy over time. The CPI is used to measure inflation. - From 1995 to 2010, the average annual inflation rate in the Philippines ranged from 2.8% to 9.3%, with monthly rates varying during the year. - High inflation decreases the purchasing power of the Philippine peso, while low inflation increases its purchasing power

    Original Description:

    How to compute CPI and Purchasing Power of Peso

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    The document discusses the Consumer Price Index (CPI) and inflation rates in the Philippines. It provides the following key points: - The CPI is a statistical measure used to determine the average change in prices over time of goods and services in a fixed market basket that represents consumer spending. - Inflation is a general increase in prices for goods and services in an economy over time. The CPI is used to measure inflation. - From 1995 to 2010, the average annual inflation rate in the Philippines ranged from 2.8% to 9.3%, with monthly rates varying during the year. - High inflation decreases the purchasing power of the Philippine peso, while low inflation increases its purchasing power

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    383 views14 pages

    Consumers Price Index, PPP

    Uploaded by

    Teresita Balgos
    The document discusses the Consumer Price Index (CPI) and inflation rates in the Philippines. It provides the following key points: - The CPI is a statistical measure used to determine the average change in prices over time of goods and services in a fixed market basket that represents consumer spending. - Inflation is a general increase in prices for goods and services in an economy over time. The CPI is used to measure inflation. - From 1995 to 2010, the average annual inflation rate in the Philippines ranged from 2.8% to 9.3%, with monthly rates varying during the year. - High inflation decreases the purchasing power of the Philippine peso, while low inflation increases its purchasing power

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 14

    CONSUMERS PRICE INDEX : CPI

    Consumers Price Index is the statistical


    measure of the average percentage in
    the retail prices of fixed market basket
    of goods and services customarily
    purchased by a specific group of
    consumer in a specific time and place.

    Steps in the Computation of the CPI
    Fix the basket
    Find the Prices
    Compute the baskets cost
    Choose the base year and compute the
    index
    Choose the appropriate formula to be
    use
    Uses of CPI
    Determines the following :
    Price Level Changes qualitatively and quantitatively
    Inflation
    Purchasing Power Parity

    CPI : Laspeyers Index; Paasches Index
    CPI =P
    n
    Q
    o
    / P
    o
    Q
    o

    PPP : Purchasing Power of PESO
    PPP is the value of money measured through the use
    of CPI
    PPP = 1/ cpi
    When cpi is high (that is when prices of commodities
    are high); the value of money is low, when cpi is low
    (when prices of commodities are low) the value of
    money is high
    Base Year 1995 Current
    Year
    2000
    PnQo PoQo
    Items Price (Po) Quantity
    (Qo)
    Price (Pn) Quantity
    (Qn)
    A 0.10 80 0.15 200 12 8
    B 2 10 1.50 5 15 20
    C 0.80 50 1 75 50 40
    D 0.20 100 0.25 100 25 20
    PnQo =102 PoQo = 88
    CPI
    Price Level
    Change
    Purchasing
    Power of
    Peso
    Interpret
    CPI : Laspeyers Index
    CPI =P
    n
    Q
    o
    / P
    o
    Q
    o
    CPI = 102/88

    CPI
    = 1.16 or 116%
    The Price has increased by 16 % from 1995 to 2000

    PPP = 1/cpi
    PPP = 1/1.16
    PPP = 0.862

    Interpretation
    : The P1 of 1995 is worth 0.86 centavos in
    2000


    A general increase in the price of goods
    and services in an entire economy over
    time.

    TYPES OF INFLATION

    1. DEMAND PULL INFLATION
    2. COST PUSH INFLATION
    3. STRUCTURAL INFLATION
    formula for INFLATION RATE

    Yearly = [ cpi current year/cpi previous year-1]100
    Monthly=[ cpi current mo/cpi previous mo-1]100
    Quarterly= [ cpi qtr of current yr /cpi previous of
    same qtr of previous yr-1]100
    EFFECTS OF INFLATION

    1. It will result to hoarding or illegal storing of
    product
    2. It will aggravate poverty conditions
    3. Investment is very risky
    4. Lenders of Money or creditors lose during
    inflation while debtors benefit from it because of
    the decrease in the purchasing power of peso

    Inflations Effect.
    If household but Inflation at a higher rate, then
    households purchasing power .
    If household and inflation rate proportionally, then
    household maintains purchasing power.
    Cost of living adjustment clauses (COLA)
    Provisions for income adjustment to accommodate
    changes in price level, which are included in wage
    contracts.

    INFLATION RATES
    (2000 = 100)
    1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
    Average 6.7 7.5 5.6 9.3 5.9 4 6.8 3 3.5 6 7.6 6.2 2.8 9.3 3.2 3.8 4.4

    January 5.8 8.5 5.6 6.5 10.5 2.2 7.5 3.7 2.8 4.1 8.4 6.7 3.9 4.9 7.1 4.3 3.6
    February 5 8.7 5.3 7.6 9 2.5 7.4 3.2 3.2 4 8.5 7.6 2.6 5.4 7.3 4.2 4.3
    March 5.6 8.7 5.4 8.1 7.7 2.8 7.6 3.5 3 4.2 8.5 7.6 2.2 6.4 6.4 4.4 4.3
    April 5.6 8.9 5.1 8.3 7.1 3.3 7.4 3.5 3.3 4.3 8.5 7.1 2.3 8.3 4.8 4.5 4.3
    May 6.3 8 5 9.7 5.8 3.4 7.4 3.5 3.4 4.5 8.5 6.9 2.4 9.5 3.3 4.3 4.5
    June 6.6 8 5.6 10 4.9 3.8 7.2 2.9 3.9 5.4 7.6 6.7 2.3 11.4 1.5 4 4.6
    July 6.4 7.8 5.4 10.1 4.8 4.2 7.4 2.6 3.7 6.6 7.1 6.4 2.6 12.3 0.2 3.9 4.6
    August 6.8 7.3 5.3 9.9 4.7 4.4 7 3 3.4 6.8 7.2 6.3 2.4 12.4 0.1 4.1 4.3
    September 8.8 5.3 5.8 9.9 4.9 4.2 6.8 2.7 3.6 7.2 7 5.7 2.7 11.8 0.6 3.5 4.6
    October 8.8 5.4 5.9 9.8 5 4.6 6.1 2.6 3.6 7.7 7 5.4 2.7 11.2 1.6 2.8 5.3
    November 8.1 6.5 6.4 10.7 3.6 5.7 5 2.4 3.9 8.2 7.1 4.6 3.2 9.9 2.8 3.1 4.7
    December 8.1 6.9 6.2 10 3.9 6.5 4.5 2.5 3.9 8.6 6.7 4.3 3.9 8 4.3 3.1 4
    Note: Monthly inflation rates when averaged do not tally with the annual inflation rates computed from the
    Consumer Price Index in the Philippines.
    Starting January 2012, National Statistics Office (NSO) will no longer issue the 2000 based Consumer
    Price Index and Inflation Rates.
    Source: National Statistics Office
    (NSO)

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