The inflation in Davao Oriental continued to move at a slower pace of 6.6 percent in June 2023 from 7.5 percent in May 2023. This is the third consecutive month of deceleration in inflation and the lowest in the past 13 months. In June 2022, inflation rate was higher at 7.4 percent The average inflation rate for the first semester of the year stood at 9.7 percent. (Tables A and B, and Figure 1)

The downtrend of the overall inflation in June 2023 was primarily influenced by the slower annual increase in the index for food and non-alcoholic beverages at 7.9 percent in June 2023 from 8.5 percent in the previous month. The faster annual decrease in transport at -6.2 percent during the month from -2.9 percent in May 2023 also contributed to the downtrend of the overall inflation. Housing, water, electricity, gas and other fuels was the third main source of deceleration of inflation in June 2023 with 5.8 percent annual growth rate from 7.2 percent in May 2023.

Compared with their previous month’s inflation rates, slower annual increments were also noted in the indices of the following commodity groups during the month:

a. Alcoholic beverages and tobacco, 10.9 percent;

b. Personal care, and miscellaneous goods and services, 8.7 percent;

c. Clothing and footwear, 4.0 percent;

d. Recreation, sports and culture, 10.6 percent;

e. Furnishings, household equipment and routine household maintenance, 6.0 percent; and

f. Health, 6.0 percent.

On the contrary, the index of restaurants and accommodation services exhibited faster year-on-year growth during the month at 17.9 percent from 16.1 percent in May 2023.

The other commodity groups, i.e., information and communication, education, and financial services retained their previous month’s annual growth rates. (Tables C)

Food inflation continued to decelerate for the third consecutive month at 8.0 percent in June 2023. In the previous month, food inflation was recorded at 8.4 percent, while 6.0 percent in June 2022. (Table D)

The slower food inflation during the month was primarily influenced by the lower annual growth in meat and other parts of slaughtered land animals at 2.4 percent in June 2023, from 7.7 percent in May 2023. This was followed by vegetables, tubers, cooking bananas and pulses with an inflation rate of 3.4 percent in June 2023 from 13.3 percent in the previous month. Moreover, slower year-on-year growth rates were observed in the indices of the following food groups during the month:

a. Corn, 7.9 percent;

b. Oils and fats, 13.8 percent;

c. Flour, bread and other bakery products, pasta products, and other cereals, 7.1 percent;

d. Fruits and nuts, 1.4 percent;

e. Sugar, confectionery and desserts, 29.4 percent; and

f. Ready-made food and other food products n.e.c., 6.6 percent.

On the contrary, higher annual increases were observed in the indices of rice at 4.9 percent; fish and other seafood at 13.4 percent; and milk, other dairy products and eggs at 15.4 percent. (Table D)

Relative to their annual rates in the previous month, all the provinces/highly urbanized city in Davao Region recorded lower inflation in June 2023. Davao Oriental’s inflation of 6.6 percent ranked as the second highest next to Davao City’s 7.6 percent. The province of Davao del Norte remained as the province with the lowest inflation rate for the fifth consecutive month at 2.5 percent. (Table E)

Purchasing Power of  the Peso (PPP)

The purchasing power of the peso (PPP) shows how much the peso in the base year (2018) is worth in another period. It is computed by getting the reciprocal of the CPI and multiplying the result by 100.

The PPP in Davao Oriental dropped to 0.80. This means that the amount of PhP100.00 in 2018 is equivalent to PhP80.00 in June 2023. In June 2022, the PPP was higher at 0.86. (Figure 2)

TECHNICAL NOTES

Uses of CPI

The 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 Year/Period - A period, usually a year, at which the index number is set to 100. It is the reference point of the index number series.

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. Weighting System - The weighting 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 (2006) weights.

e. Geographic Coverage - CPI values are computed at the national,regional, and provincial levels, and for selected cities.

Note: CPIs and inflation rates by province and selected city are posted at the PSA website (https://openstat.psa.gov.ph/).

Approved for release:

EMILY P. TOMOGDAN

(Supervising Statistical Specialist)

Officer-in-Charge