The Consumer Price Index (CPI) was estimated at 166.6 for the Philippines, 168.7 for the National Capital Region (NCR), and 165.8 for areas outside NCR (AONCR).

Measured from a year ago, the average national inflation rate slowed down by 3.0 percentage points to 3.1 percent in 2002 from 6.1 percent in 2001 as inflation for all the commodity groups decelerated during the period in review.

The highest inflation rate during the year at 3.8 percent was registered in January.

Annual average inflation rate in NCR was lower by 3.4 percentage points to 3.8 percent in 2002 from 7.2 percent in 2001. Likewise, annual average inflation rate in AONCR slid to 2.9 percent from 5.7 percent last year. The lowest inflation rate in NCR at 2.1 percent was posted in November. In AONCR, the lowest inflation rate in 2002 was recorded in July at 2.5 percent.

Lower annual price changes were noted in all the regions in 2002.

Among the regions, Region II (Cagayan Valley) registered the lowest annual average inflation rate during the period at 1.4 percent followed by Region III (Central Luzon) at 1.7 percent. Meanwhile, the highest annual average inflation rate was observed in Region X (Northern Mindanao) and Region XI (Southern Mindanao) at 3.8 percent.
 

By Commodity Group

Compared to 2001, the inflation rates for all the commodity groups decelerated in 2002. Annual average Inflation rate for food, beverages and tobacco (FBT) slipped to 2.0 percent in 2002 from 4.1 percent in 2001; clothing, 2.6 percent from 3.7 percent; housing and repairs (H&R), 4.9 percent from 6.8 percent; services, 5.0 percent from 11.5 percent; and miscellaneous items, 1.9 percent from 5.2 percent. The biggest drop in inflation rate was for FLW. It declined by 7.3 percentage points to 4.8 percent in 2002 from 12.1 percent in 2001 brought about by the lower charge for electricity in many regions along with the reduction in the purchased power adjustment (PPA) for electricity in NCR which took effect in July 2002.

The good production of corn brought about by the favorable weather conditions that prevailed during the year significantly resulted to -11.2 percent annual average inflation for corn in 2002 from 3.5 percent in 2001. However, the price of corn in AONCR went up to 2.0 percent in 2002 from 1.1 percent in 2001 with Region III (Central Luzon) posting the highest inflation rate at 10.8 percent during the year.

Increases in the prices of milk and milk products slowed down during the year as the average annual inflation rates for dairy products in the Philippines decelerated to 4.2 percent in 2002 from 11.0 percent; NCR, 5.5 percent from 12.6 percent; and AONCR, 3.7 percent from 10.2 percent. Slowdowns in the prices of these items were experienced more during the second half of the year.

Lower quotations in some fish species were recorded in January for NCR particularly for shellfish. This was brought about by the low consumer demand due to the occurrence of red tide during the month. The favorable weather conditions that prevailed during the months of February, March, April and October also pushed down the prices of fish in the area. However, when NCR experienced heavy rains and tropical depressions in June and four typhoons (Gloria, Hambalos, Juan and Kaka) in July, the supply of brackish water and marine fish was so low that it pulled up the prices of fish in the area during these months. In August, good production of brackish water and fresh water fish species in NCR brought about abundant supply in the markets until September. Thus, prices were lower during these months. On the other hand, the stormy weather conditions in some regions during the month of August raised the prices of marine fish in AONCR.

The slowing down of trading in January after the traditional New Year’s peak brought down prices of fruits (from unsold stocks) in NCR. Abundant supply of vegetables in the markets also pushed down the prices of these items during this period. In February, abundant supply of fruits and vegetables due to the prevalence of favorable weather condition in the country also lowered their prices. Despite the extreme heat experienced by the country in April, prices of vegetables were still on the downtrend. Discounted prices of fruits in season were observed in April and May. Abundant supply of fruits in NCR that amply met demand in June along with the lower prices of vegetables also accounted for the decline in the fruits and vegetables index in the area. However, retailers increased the prices of fruits and vegetables to recover losses brought about by the hot weather experienced during the month of June, resulting to increments in the fruits and vegetables index in AONCR. In July, the closure of all exit points in Benguet due to landslides and floods caused by typhoons brought insufficient supply of vegetables in NCR, thus raising their prices. The two typhoons (Lagalag and Milenyo) that hit some parts of the country in August also increased prices of vegetables in AONCR. However, abundant supply of vegetables that flowed in at the various unloading points in NCR along with sufficient supply of selected fruits in season like dalanghita and lanzones resulted to the decline of prices of these items in September. The fine weather in NCR and nearby provinces in October allowed easy movements of vegetables in fresh markets. In addition, the abundant supply of imported fruits in NCR markets reduced their prices during the month.

The adequate supply of chicken in the markets generally pulled down prices of meat during the year. In addition, chicken retailers in public markets brought down its prices to compete with the low prices of chilled and frozen chicken sold at the supermarkets. The low demand of meat was noticed in August as consumers shifted to the much cheaper bangus and tilapia.

Inflation for all the commodity groups improved in all the regions.

The FBT index in NCR registered an annual average inflation rate of 0.8 percent in 2002, lower by 3.6 percentage points from its last year’s annual inflation rate of 4.4 percent. Except for Region IX (Western Mindanao), Region XI (Southern Mindanao) and Region XII (Central Mindanao), all the other regions recorded lower inflation rates in 2002 compared to the preceding year. The lowest inflation rate in FBT was posted in Region III (Central Luzon) at 0.6 percent while the highest rate at 3.8 percent was noted in Region VII (Central Visayas).

Likewise, inflation rate in the clothing index was generally lower in 2002 as movements in the prices of footwear and some clothing items were generally lower during the period. Inflation in NCR was down by 1.8 percentage points to 3.4 percent in 2002 from 5.2 percent in 2001.The lowest rate recorded for the year was in Region VIII (Eastern Visayas) at 0.8 percent while the highest rate at 3.4 percent was observed in Region V (Bicol).

Movements in the prices of selected construction materials and increments in rental rates in NCR were generally the same in 2001 and 2002 as the average inflation in H&R remained at 6.3 percent. However, in AONCR, average inflation for the group in 2002 was slower by 3.0 percentage points to 4.1 percent from 7.1 percent a year ago as all the regions posted lower rates during the year. This can be attributed to the lower annual growths recorded in the prices of construction materials and slower annual movements of rental rates. The lowest rate of 0.7 percent was noticed in Region II and Region IX. The biggest drop in inflation rate was in Regions VII and IX at 9.9 percentage points and 6.8 percentage points, respectively.

Downward adjustments in the purchased power adjustment (PPA) for electricity in NCR were implemented during the second half of 2002. Prices of LPG and kerosene in the area also generally improved during the year. This was experienced more during the second half of 2002. All these factors contributed to the 7.6 percentage points drop in the average annual inflation rate in NCR to 11.3 percent in 2002 from 18.9 percent in 2001. Similarly, increases in the prices of kerosene, LPG and electricity rates in many regions were generally lower in 2002 than the increments posted in 2001. These pushed down the average inflation in AONCR to 1.4 percent in 2002 from 8.9 percent last year. Compared to 2001, except for Region XII whose annual average inflation rate remained at 5.4 percent, all the regions registered lower rates during the year. The lowest rate at –0.8 percent was noticed in Region I (Ilocos) while the highest rate was observed in Region XII (Central Mindanao) at 5.4 percent.

The 2002 average inflation for the services index slowed down in all the regions including NCR. This was brought about by the declines in the inflation of the educational services and transportation. Downward movements in the inflation rates of medical services, particularly, dental and medical charges in NCR and in some regions also contributed to the overall deceleration of the services index. While double-digit rates were noted in 2001, rates were at one-digit in 2002, ranging from 2.6 percent in Region IX to 6.6 percent in Region V. The biggest annual slowdown at 10.6 percentage points was noted in Region VII to 4.3 percent from 14.9 percent.

The significant deceleration in the inflation of the other miscellaneous items during the first five months of the year mainly contributed to the 3.3 percentage points slowdown in the overall inflation for miscellaneous items. Slower upward movements in the prices of some items for personal care and effects, household operations, household furnishings and equipment also contributed to the downward trend. Thus, inflation rates for all the regions including NCR were lower compared with their 2001 rates. The lowest rate at 1.0 percent was observed in Region IX while the highest was recorded in Region X at 4.5 percent.