INFLATION RATE: Effect on Consumers Spending

Statement of the Problem

Inflation means you need to pay more for the same goods and services.  One could also think of inflation
as a reduction of the value of money, as consumers are able to purchase less than before. As inflation
rises, the value of the peso diminishes more quickly. Elevated prices of goods hit hardest those
consumers who have not received salary increases over time. In effect, people have to constantly get a
raise to keep up with the prices of goods. High inflation is also not good for people who have long-term
investments in banks, as it may erode the value of money.

The annual inflation rate in the Philippines climbed to 5.4% in May 2022 from 4.9% in April, pointing to
the highest level since November 2018 and matching market consensus. The study aims to know the
effects of inflation rate on consumers spending. Specifically, this study aims to answer the following
questions:

1.) What is the significance of the price of a product and consumers?

2.) Who will be badly affected by the inflation rate? People with high income, middle class, or lower
class with minimum wage salaries?

3.) How does inflation rate affect the quantity and quality of products that consumers purchase?