Review of Related Literature

This chapter presents the related literature and studies after the in-depth search done
by the researchers.

Related Literature.

President Ferdinand Marcos Jr. stated in a speech that the inflation rate is “running
rampant and out of control.” News regarding inflation rates is mentioned so often in
the media which is why it is salient to know some basics about inflation and how it
affects an individual. Before the adoption of inflation targeting as a framework, the
Philippines experienced high and volatile inflation for almost a decade as a result of
several episodes of supply shocks. On a micro level or an individual level, inflation
heavily affects people. This is manifested through the mundane of things. Let’s say
for example the food that we eat in our local open space restaurants, or what in
colloquial terms karinderya. Usually, a typical Filipino meal is composed of a viand
or two, and rice. Six years ago, a single viand would only cost you 30-40 pesos. But
now, a single viand would set you back a good 70-100 pesos. To some, it might not be
such a drastic increase. However, to a minimum wage earner, those additional pesos
may constitute such a burden, especially when they don’t have any corners to cut in
the first place.

In comparison to other nearby nations, The cost of living in the Philippines is low
compared to other Southeast Asian countries. Despite this, many Filipinos still
struggle to put three meals a day on the table. The country’s poorest citizens may be
most immediately and negatively impacted by the rising costs of necessities including
food and water, housing, healthcare, education, gas, utilities, transportation, and other
everyday expenses due to the country’s ongoing rise in inflation.

According to the analysts’ predictions, the inflation rate will continue to increase and
will eventually settle over the target range of 2-4% in 2022, according to data from
the BSP. In May of last year, the inflation rate for 2022 increased to 5.4 %, the
highest level since December 2018. This increase is mostly the result of the ongoing
conflict between Russia and Ukraine’s impact on world food and oil prices, which
could result in the continuous appearance of second-round effects like higher energy
prices, increased transportation expenses, and pay increases. Additionally, it is
anticipated that the inflation rate in 2022 will stabilize towards the upper end of the
target in 2023 before slowing down in 2024.

The inflation rate in 2022 continues to rise, the highest increases in the indices of
transport, food and non-alcoholic beverages, housing, water, electricity, gas, and other
fuels have been recorded highest. The Philippines remains to be one of the high-
inflation countries in Asia.