understanding inflation: Impact on Prices, Wages, and Purchasing Power & Percentage increase and decrease in Prices and Wages

Inflation

Affects the purchasing power of money when the prices of goods and services suddenly rise. It impacts both costs and wages. If a worker's salary increases but prices increase faster, then real income may decrease.

National Economic and Development Authority (NEDA)

On January 7, 2025, they stressed that "The Philippines closed 2024 on a high note as it recorded a 2.9 percent inflation rate in December, bringing the year-to-date average to 3.2 percent—well within the government's target range of 2 to 4 percent." This data, when compared with subsequent reports on the inflation rate, can help interpret

the extent of its effect on income and consumer buying behavior.

Philippine Statistics Authority (PSA)

In the Philippines, the inflation rate is typically computed by the _____

Consumer Price Index (CPI)

which measures the variation over time in prices of goods and services.

Cost of Market Basket

Refers to the total cost of a fixed set of goods and services that a typical consumer buys, valued at current prices.

Percentage increase

Refers to the rise in the rate of change from the origi drop in the rat value to the new value.

Percentage decrease

refers to the drop in the rate of change from the original or previous value to the new value. Both are expressed in percent and are calculated by taking the ratio of difference between the original value and new value over the original value times 100.