INFLATION

1. https://www.scribd.com/document/258329928/The-effect-of-inflation-to-the-economic-growth-
of-the-Philippines
2. To attain sustainable economic growth coupled with price stability continues to be thecentral
objective of macroeconomic policies for most countries in the world today. In thisera of
globalization, the effect of economic inflation crosses borders and percolates to bothdeveloping
and developed nations. Too much money in circulation, increases productioncosts, declines in
exchange rates, decreases in the availability of limited resources such asfood or oil etc. are the
basic causes of inflation. Inflation is a sign that an economy isgrowing, but excessive economic
growth can be detrimental as it can lead to hyperinflationas experienced, at the other extreme,
an economy with no inflation has essentiallystagnated. The right level of economic growth, and
thus the right level of inflation, issomewhere in the middle. The question on whether or not
inflation is harmful to economicgrowth has recently been a subject of intense debate to policy
makers and macroeconomists. Several studies have estimated a negative relationship between
inflation andeconomic growth. Specifically, the bone of contention is that whether inflation is
necessaryfor economic growth or it is detrimental to growth. High and continued economic
growthwith low down inflation is the essential purpose of the macroeconomic strategy makers

(Rose, 2019)

https://www.scribd.com/document/428881285/Inflation-and-Its-Impact-on-Economic-Growth

3. Inflation refers to the economic condition of continuously rising general level of prices of goods
and services, resulting in a loss of the purchasing power of money. The inflation rate is one of
the common indicators derived from the Consumer Price Index (CPI) which is a measure of the
average retail price of a standard “basket” of goods and services consumed by a typical Filipino
family. The composition of such standard basket is determined by a Family Income and
Expenditure Survey (FIES) periodically conducted by the National Statistics Office (NSO). In brief,
the Philippine CPI basket is accounted for by food items (58.5 percent), housing and repairs (13.3
percent), clothing (4.4 percent), services (10.9 percent), fuel, light and water (5.4 percent) and
miscellaneous items (7.6 percent). Because food accounts for more than half of the index,
variations in agricultural output, either due to seasonal factors or low agricultural productivity
have made the inflation rate more volatile. Inefficiencies in the agricultural sector have led to a
system chain reaction in the economy. These inefficiencies have led to higher inflation, demand
for higher wages, and consequently, the institution of food policies. Several studies have raised
the question as to the suitability of the CPI as a measure of inflation especially for monetary
policy. Crawford, et. al. (1997), for example, considered two other measures of aggregate prices:
the implicit gross domestic product (GDP) deflator, and unit labor costs. There are also issues as
to how the underlying or “core” inflation should be measured and the size of the bias in CPI
inflation. The core inflation index excludes either food or energy products or both in order to
reduce volatility in inflation figures. If food is removed from the commodity basket, more
moderate declines or increases in the prices of goods and services than what the official inflation
data shows will be recorded.
4. According to Fitch Solutions Country Risk and Industry Research, a substantial portion of the
average Filipino family's household budget were spent on food, with a focus on meat and
poultry goods. The primary cause for the increase in spending is due to higher disposable
income. Spending on carbohydrate staples such as bread, rice, and cereals will decline from 36
percent to 20.4 percent in 2025 as households consume more animal protein such as meat and
fish. Between 2006 and 2025, average Filipino families will spend more on meat and poultry—
22.3 percent versus 17.5 percent of total food consumption—while spending on fish and fish
products would rise to 24.2 percent versus 12.7 percent. Anyone who buys for food on a daily
basis has likely seen a significant spike in the pricing of imported fruits, vegetables, and meats.
According to the United Nations' FAO Price Index, prices have risen by up to 35% in the recent
year, in line with worldwide price fluctuations. "Consumers are spending around 20% more on
food now than they were prior to the epidemic," says Melissa Walsh, CFA, CFP, AIF, founder, and
president of Clarity Financial Design. "With food and energy prices both rising, families are
seeing that trips to the supermarket and the station are stretching their paychecks," she notes.
The rise is especially noticeable during the Christmas season. The price increases are due to food
shortage, which is driven by two factors. The first is the global food supply chain disruption
caused by COVID. The second issue is the scarcity of freight containers, which China now
controls. Inflation is affecting consumers at every level. Gas prices are rising, clothes are
becoming more expensive, and many toys are becoming pricier as the holidays approach. The
COVID-19 pandemic also contributed to supply chain shortages all over the country. Products
may not be available due to shortage on raw materials for manufacturing and packaging, which
in turn rises the price of the product in response to its demand. "Labor shortages are another
concern. These challenges vary from labor to unload shipments at ports to staffing food
manufacturing plants and truck drivers to distribute the food. "This is a multi-industry problem,
with rising salaries and fewer labor leading to higher costs and fewer products," Walsh says. In
the last three years, the Philippines has had the region's highest food trade imbalance,
amounting to 2% of GDP. When the fuel trade imbalance is included in, this figure falls to -5% of
GDP. This implies that because the Philippines relies on imports from India and other countries
for necessities such as rice, it lacks weapons such as strong protectionism to help it through this
crisis. Instead, it is a victim of other nations' food nationalism since the global supply crunch
affects it the most severely through shortages and increased costs.

(Roma, 2023)
https://www.researchgate.net/publication/
367433592_INFLATION_HOW_DOES_IT_AFFECT_AVERAGE_FILIPINO_HOUSEHOLD_AMIDST_TH
E_21_ST_CENTURY

5. The relationship between inflation and economic growth is of great interest in mac-roeconomics
and monetary policy modelling. Although the relationship between the inflation rate and
economic growth has been studied extensively, nevertheless the exact relationship is not well
demaned. Findings concerning the direct relation-ship are not uniform across the existing
literature on the subject. Dierent studies have focused on dierent countries and country
groups and have employed dier-ent proxy variables and methodologies in measuring the
relationship between infla-tion and economic growth. The empirical results and policy
 recommendations vary and sometimes are in conflict. Previous studies are inconclusive in terms
of provid-ing any policy recommendations that can be applied consistently across countries.
These differences seem to be a result of dierent data sets, specic country charac-teristics,
and the dierent methodologies employed. Although many recent studies assert the school of
thought that ination retards and negatively inuences econom-ic growth, earlier studies
asserted that ination promotes growth. Empirical nd-ings on this subject in the existing
literature fall into four categories: ination does not have any inuence on economic growth
(Wai 1959, Dorrance 1966, Sidrauski 1967, Cameron, Hum & Simpson 1996); ination has a
positive impact on econom-ic growth (Mallik & Chowdhury 2001, Rapach 2003, Benhabib&
Spiegel 2009); ination has a negative inuence on economic growth (Friedman 1956,
Stockman 1981, Fischer 1983, Barro 1995, Valdovinos 2003); and ination impacts econom -ic
growth in terms of specic thresholds (Aydin et al. 2016, Ghosh & Philips 1998, Bruno &
Easterly 1998, Khan, Semlali& Smith 2001, Drukker, Gomis-Porqueras &Hernandez-Verme 2005,
Kremer, Bick &Nautz 2009, Vinayagathasan 2013).
https://www.researchgate.net/publication/
319935091_Inflation_and_Economic_Growth_a_Review_of_The_International_Literature

6. Nobel prize winner Friedman (Citation1977) asserted that high and volatile inflation inhibits
economic growth, and since then, a research about the effect of inflation on output growth
became a relevant topic in macroeconomics. Fischer (Citation1993) contended that growth is
mainly affected through uncertainty, whereas the latter is generated through inflation, instability
of the budget or current account. According to Friedman’s (Citation1977) theory, high and
unstable inflation causes an increase in inflation uncertainty that distorts the information
content of prices, which consequently spills over to the efficient allocation of resources. Some
papers, such as Lyziak (Citation2016) and Caglayan et al. (Citation2016), argued that in high
inflation conditions, companies cannot detect profitable investment opportunities, because it
impedes them to extract information about the relative prices of goods. In addition, during high-
inflation times, external funds become prohibitively expensive due to increased information
asymmetries. Both above-mentioned factors force companies to quit or postpone their fixed
investment projects, which inevitably lowers output growth. Apergis (Citation2005) listed more
conduits through which inflation has an impact on economic growth. For instance, inflation can
adversely affect savings, the structure of the tax system that transmits indirectly on investments,
the activity of financial markets, the volatility in interest and exchange rates and the effect on
the distribution of human capital. According to Grier and Grier (Citation2006), there is little
theoretical consensus on how inflation affects economic performance, since many papers found
neutral, negative or even positive effect of average inflation on economic performance.

(Zivkov, Kovacevic, Blagojevic, 2020)

https://www.tandfonline.com/doi/full/10.1080/1406099X.2020.1846877

7. nflation in a general manner affects the behavior of every people. Our choice to purchase a
single product will vary for the reason that the cost of the same product we bought a month ago
may be different from its current price, which basically is a result of inflation. Inflation is the
rising price of goods and services over time. (Amadeo, K.,2018). In short, inflation increases our
 cost of living. Once our cost of living increases,our power to purchase certain goods and services
will decrease since it decreases thevalue of our Philippine Peso.In the Philippines, inflation are
being managed and handled by the BangkoSentral ng Pilipinas (BSP), with the main goal of
limiting and normalizing the rate of inflation in order not to affect the living of the Filipino
people and for the economy to runsmoothly. Section 3 of Republic Act 7653 or the New Central
Bank Act, signed in 1993,stated that the BSP’s primary objective is “to maintain price stability
conducive to a balanced and sustainable growth of the economy. It shall also promote and
maintainmonetary stability and the convertibility of the peso.” A change in the government ruler
also plays an important role in the increase or decrease of inflation rate. If the projectsand
programs affecting the importation, exportation, employment, production of goodsand services
and other external factors like security and order amongst others are notcontrolled and
maintained, drastic change in the inflation rate may follow. Noticeableinflation increases were
observed during the time of then-presidents Ferdinand Marcos,Cory Aquino and Gloria Arroyo
dating back to 1970s which were affected by various
factors like the devaluation of the peso, massive government spending, skyrocketingworld oil
prices, pernicious policies of debt-driven growth, crony capitalism, multiplecoup attempts, global
rice crisis, and a series of typhoons. According to economist JCPunongbayan, Under the Rodrigo
Duterte administration, the country’s high inflationrates are caused not just by rising world oil
prices. Added by Rappler, other factors alsocontribute to it, such as the effect of the tax reform
law on the price of petroleum products, the weakening peso, and the people’s expectations of
inflation.According to the Philippine Statistics Authority (PSA), the country’s inflation raterose
from 6.4% in August to 6.7% in September 2018 which is the highest in over 9 yearsand also the
9th consecutive monthly inflation rate increase starting from January 2018.Government
economic managers and some businessmen have said the recent inflationlevels are “mere
hiccups” and are “manageable”, and some have even attempted to drag previous
administrations into the increasing inflation issues to justify the currentnumbers.Recently, we
were greeted by truly shocking news: the Philippines inflation ratewhich measures how fast
prices are rising, reached a whopping 6.4% in August(Punongbayan, J., 2018). This drastic
increase in the rate is not only the highest in 9.4years, it also exceeded government’s upper
forecast of 6.2%, and is way above thegovernment’s 4% target in 2018. In addition, data also
shows that this enormous 6.4%rate is also the highest in all ASEAN countries. In relation to this,
we can also notice thatwhen President Duterte came into office, the inflation rate of the
Philippines was alwaysin the middle, but these days, we’re on top of everyone else.

(Sulit, 2018)
https://www.academia.edu/39549482/Research_Paper_Inflation_Rate_in_the_Philippines

8. The term "inflation" originally referred to a rise in the general price level caused by an
imbalance between the quantity of money and trade needs. However, economists today
commonly use the term "inflation" to refer to increases in the price level. An increase in the
money supply may be called monetary inflation, to distinguish it from rising prices, which
for clarity may be called "price inflation". Economists generally agree that in the long run,
price inflation is related to increases in the money supply.
Conceptually, inflation refers to the general trend of prices, not changes in any specific
 price. For example, if people choose to buy more cucumbers than tomatoes, cucumbers
consequently become more expensive and tomatoes cheaper. These changes are not related to
inflation; they reflect a shift in tastes. Inflation is related to the value of currency
itself. When currency was linked with gold, if new gold deposits were found, the price of
gold and the value of currency would fall, and consequently, prices of all other goods
would become higher.
Other economic concepts related to inflation include: deflation– a fall in the general price
level; disinflation– a decrease in the rate of inflation; hyperinflation– an out-of-control
inflationary spiral; stagflation– a combination of inflation, slow economic growth and high
unemployment; reflation – an attempt to raise the general level of prices to counteract
deflationary pressures; and asset price inflation – a general rise in the prices of financial assets
without a corresponding increase in the prices of goods or services.

(Remesh, 2021)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3816410

9. The Philippines, a developing country, after having a relatively stable inflation rate for
several period, is currently struggling with the continuous increase of inflation, including its
economic and social consequences. In this globalization era, inflation is one of the major
challenges of most economies in the world and affects the growth of both developing and
developed countries in diverse ways. As defined, inflation is the persistent rise of the general
level of prices of goods and services for a period of time in a given economy.

(Gatpolintan & Avila, 2019)

https://www.researchgate.net/publication/
337007287_Perceived_Effects_of_Inflation_on_Budget_Consumption_of_Public_Secondary_Sch
ool_Teachers_in_Ragay_Camarines_Sur_Philippines

10. A recent wave of global food price inflation has pushed millions of people into poverty. Many
people who were poor before these price increases may now be on the verge of hunger and
malnutrition. In view of this development, the standard measures of inflation may have now
become irrelevant because they do not take into account the consumption patterns of the poor.
Standard measures of inflation are calculated based on an average consumption basket.
However, there is a significant variation in the consumption basket across the population,
including by income level (Arrow 1958). This consumption basket consists of different
commodities with different prices (i.e., the prices of different commodities change at different
rates). Consequently, the impact of changes in prices on the poor will be different from that of
the rich. If food prices go up at a faster rate than nonfood prices, this will hit the poor harder
than the rich. This is because a higher proportion of the poor’s consumption basket is devoted to
necessary goods and services such as food items. It is thus highly relevant for policymakers to
identify the impact of relative prices changes on different segments of the population. This
paper intends to address this issue using the Philippines as a case study. The main objective of
this paper is to define a measure that will systematically capture the impact of prices on poverty.
Poverty can be measured by several indices. The most common among them are the class of
 Foster, Greer, and Thorbecke (FGT) poverty measures (Foster, Greer, and Thorbecke 1984). Every
poverty measure gives different weights to the poor depending on how far below the poverty
line they are. Therefore, the impact of prices on poverty will differ depending on what poverty
measure is used. This paper develops a methodology to measure the impact of prices on poverty
based on three most popular measures of poverty: headcount ratio, poverty gap, and severity of
poverty. In practice, the inflation rate is officially estimated based on the Laspeyres price index,
which uses the average budget shares of goods in the consumer’s basket as weights. However,
this index is completely insensitive to the distributional impact of price changes. Hence, to
understand the impact of price changes on poverty, an alternative price index using weights that
reflect the consumption patterns of the poor is needed. This paper derives a new price index for
the poor (PIP) where the weights used are derived from the price elasticity of poverty. Thus,
there will be a monotonic relationship between the PIP and the changes in poverty, implying
that the higher the index is, the greater the increase in poverty.1 The PIP will be useful in
assessing whether price changes hurt the poor relatively more (or less) than the nonpoor when
measured against the commonly used Laspeyres price index.

(Son, 2008)
https://www.adb.org/publications/has-inflation-hurt-poor-regional-analysis-philippines

The effects of inflation are huge

and it doesn’t just affect areas
like our salaries and the
cost of purchasing a new home.
Inflation hits us from every
angle. Food prices go up,
transportation prices increase,
gas prices rise, and the cost of
various other goods and
services skyrocket over time.
All of these factors make it
absolutely essential that you
account for the huge impacts
that inflation can have on your
long-term savings. (Pat,
2018)
When looking at individual
goods, price changes may result
from changes in
consumer preferences, changes
in the price of inputs, changes
in the price of substitute or
complement goods, or many
other factors. When looking at
the inflation rate for an entire
economy, however, these
microeconomic factors are
relatively unimportant. Instead,
most
economists agree that in the
long run, inflation depends on
the money supply.
Specifically, the money supply
has a direct, proportional
relationship with the price level,
so if, for example, the currency
in circulation increased, there
would be a proportional
increase in the price of goods.
To understand this, imagine that
tomorrow, every single
person’s bank account and
salary doubled. Initially we
might feel twice as rich as we
were before, but prices would
quickly rise to catch up to the
new status quo. Before long,
inflation would cause the real
value of our money to return to
its previous levels. Thus,
increasing the supply of money
increases the price levels. This
idea is known as the
quantity theory of money.
(Lumen Learning, 2019)
11. https://www.studocu.com/ph/document/university-of-perpetual-help-system-jonelta/research-
with-thesis-writing/chapter-i-inflation-rate-and-its-effect/30763006

12. https://www.researchgate.net/publication/
358492947_A_qualitative_study_on_the_effect_of_access_to_finance_on_the_growth_motivati
on_of_micro-_and_small_enterprise_owners_in_the_Philippines

13.