According to Pasco, price increases impact consumption, which, in turn, affect

consumer frequency of purchase. https://businessmirror.com.ph/2018/10/08/train-

inflation-may-put-sari-sari-stores-out-of-business/
Gregoria Jaradal, Treasurer of the Philippine Association of Stores and Carinderia
Owners, Inc., said members are struggling because the prices of their inventory or
ingredients have risen sharply. According to Ms. Jaradal, sales of small retailers, known
as sari-sari stores, and carinderias, or roadside eateries, have been affected by the
shortage of softdrinks, production of which has stalled due to the sugar
shortage. https://www.bworldonline.com/economy/2022/08/28/471004/small-retailers-
hurt-by-high-costs-drinks-shortages/
According to the latest market study conducted by shopper panel Kantar, the inflation
pressures led to more Filipinos buying their household needs in neighborhood stores
like sari-sari stores, to save on gas, transportation fares, and time.
According to Obana, 41 percent of FMCG (fast-moving consumer goods) purchases in
2022 were made in neighborhood sari-sari stores, this is a six percent increase
compared to purchases made in 2020. This development has put pressure on bigger
supermarket outlets, and hypermarts with a six percent value share decline in
hypermarkets and supermarkets from 34 percent in 2020 to 28 percent this year.
https://www.philstar.com/the-freeman/cebu-business/2022/12/07/2229064/sari-sari-
stores-benefit-inflationary-times

Aurangzeb, Ahmed, and Mubarak (2012) discovered unexpected inflation and stock
prices having a negative relationship. This means that amount of goods and services
that money can buy is slowly reduced by the increase in the general price index.
The neighborhood sari-sari (variety or general) store is part and parcel of daily life for
the average Filipino. Any essential household good that might be missing from one’s
pantry – from basic food items like coffee and margarine, to other necessities like
mosquito coils, soap, and matches – is most conveniently purchased from the sari-sari
store nearby at affordably portioned quantities, sometimes even on credit. Apart from
the most affluent communities, the sari-sari store is a constant feature of residential
neighborhoods in the Philippines both in rural and urban areas, proliferating even in the
poorest squatter communities. About 93 percent of all 1 sari-sari stores nationwide are
located in residential areas (Bonnin, 2004: 80; McIntyre, 1955), and are typically
operated from a portion of the owner’s house (Chen 1997; Bonnin, 2004; McIntyre,
1955; Silverio, 1982).

Inflation tracks the rising prices of goods and services in the economy, often measured
by the Consumer Price Index (CPI). The CPI is an important indicator of price stability in
the economy, measuring the average change in prices over time of all goods and
services purchased by all urban consumers. The CPI covers the data of 21 sectors,
including food, energy, medical care, transportation services, and more. Simply put,
when prices of everyday goods and services rise, the money earned and saved by
consumers today is less valuable than it once was. 

Higher production and transportation costs force businesses to either take a margin hit
or pass these costs along to the consumer through inflated retail prices. For the health
of their business, many companies, especially public companies that have fiduciary
responsibilities to shareholders, choose to raise their prices. 

As prices increase and consumer dollars lose value, demand for goods naturally
weakens.

Consumers are more concerned about preserving the value of their existing cash and
covering their debt and daily expenses than investing or splurging on discretionary
items. Naturally, this is bad news for retailers, ultimately leading to decreased revenue
and inventory forecasting issues. 

Executives and analysts expect these trends to continue, as many large retailers are
already adjusting their revenue estimates for 2023.  

Of the 79 large retailers that reported earnings between April 1 and May 23 of this year,
59% disclosed a decline in consensus revenue estimates for 2023, and 71% saw a
decrease in estimates for 2023 earnings before interest, taxes, depreciation, and
amortization (EBITDA), according to a report from McKinsey. 

According to the SBAF Small Business Survey released in March 2022, over 60% of

small business owners cited inflation as their top challenge. Similarly, as captured in
the NFIB Small Business Optimism Index, inflation has now replaced “labor quality” as
the number one problem for small business owners, with 31% of owners reporting that
inflation was the single most important problem in their business. This marks the highest
reading since the first quarter of 1981.

 https://www.shopify.com/ph/retail/inflation-in-retail (by Randy Ginsburg, 14 Jun

2022)

Inflation measures the increase in prices for goods and services over time. As prices
rise, the purchasing power of consumers and businesses goes down—which means
they get less than what they used to for the same amount of money.

According to a joint report from the U.S. Chamber of Commerce and MetLife, 86% of
small business owners are concerned about the impact inflation will have on their
business. The U.S. Chamber of Commerce and MetLife survey found that, due to
inflation, 74% of small business owners report that rising prices have significantly
impacted their business in the past year. Perhaps as a result, another 76% of
respondents are having difficulties managing these unexpected price increases.

A recent Kiplinger report states that the U.S. inflation rate soared to 9.1% in June—the
highest it’s been since 1981—and will likely stay near the 9% mark for the rest of 2022.
So, it’s very likely that sustained inflation and its far-reaching effects will continue to
impact the economy for the foreseeable future.

https://www.freshbooks.com/blog/inflation-business (Feli Oliveros, Freelance Contributor,

August 8, 2022)

Inflation is defined as the rate of increase in the value of goods and services over
a given time period. Inflation is commonly measured as a broad statistic, such as the
overall rise in prices or the cost of living in a given country. In any case, inflation is
defined as an increase in the cost of a specific set of goods and/or services over a
specific time period, most commonly a year. People's purchasing power will decrease
as a result of inflation, resulting in a serious reason why every business must take
action. High inflation rates in every country around the world will undoubtedly have a
negative effect on some businesses that have a limited budget due to certain debt
obligations and expenditures. Low-income households will feel the effects of inflation
much faster and more deeply than middle- to upper-income households. This is
because low-income consumers have a smaller budget buffer to cover the additional
cost when inflation rates rise. When the cost of necessities such as food, utilities, and
housing rise, consumers must spend more of their hard-earned money each month.
This may not be a dealbreaker for those whose incomes adjust with inflation, but for
those who do not, it means an increase in the overall cost of living.
Inflation has been on the rise since the pandemic. According to Philippine
Statistics Authority, inflation in the Philippines continued its uptrend as it accelerated
further to 8.7 percent in January 2023, from 8.1 percent in December 2022. The
January 2023 inflation is the highest annual rate recorded since November 2008. Small
business owners identify inflation as the biggest risk to their business survival, and 22%
of them are of the opinion that inflation has reached its peak. The Fed's decision to fight
inflation by hiking interest rates also implies doom for small business owners who are
thinking about taking out loans to fund their operations.
According to the National Federation of Independent Business (NFIB), about
90% of small business owners report that the current inflation has an unfavorable
impact on their business. Small businesses are under pressure from inflation to either
raise prices and risk losing sales, or accept loans to cover some expenses. Over 80% of
small businesses have raised their prices in an effort to stay in business since the
pandemic, and some have been forced to make drastic cost-cutting decisions. Inflation
has one effect, regardless of its cause: it reduces your purchasing power. In essence,
your money is worth less. The consumer price index (CPI), which is used to calculate
inflation, explains this better. The CPI measures changes in the prices of goods and
services across the economy. This difference is expressed as a percentage, which
becomes the inflation rate. To maintain their profit margins, small businesses are forced
to raise the prices of their products during periods of inflation. However, this can have a
negative impact on competitiveness. Price increases may also deter customers from
purchasing your products. This is especially true for companies that sell consumer
goods. Consumers will always choose lower-cost items. As a result, some businesses
are bearing the burden of rising costs by taking out loans rather than passing them on to
customers.
Inflation is one of the biggest problems that we have, and it exists in every
country and throughout the world. However, because sari-sari stores only exist in the
Philippines, the problem involving the negative effects of inflation among sari-sari store
owners does not exist in other countries. In other countries, there are only convenience
and grocery stores. With the same amount of money, people can buy less. The ongoing
rise in the price of goods in the Philippines has a significant negative effect on small
business owners such as Sari-sari store owners. They have a limited budget for their
store, and the constant rise in prices makes it difficult for them to obtain more items. It
means they will have less disposable income and less money to spend than they would
like. Unpaid consumer debts can have an impact on the daily profits of sari-sari store
owners, reducing their income and opportunities to support their families. There are
even times wherein these debts are fully neglected as storeowners do not want to
habitually ask their customers to pay for their debts while taking the risk of losing them
(as customers of their stores). These circumstances can reduce the income of sari-sari
stores owners and further motivate the decision of closing down their businesses.
Sari-sari store owners really give their best to be able to provide more goods and
services to their consumers. And one of the problems that they are facing right now is
the constant increase in prices due to inflation. This study aims to know the negative
effects of Inflation to the sari-sari store owners. In this study, researchers can also give
the consumers the knowledge on why there are times when the prices of the products
are increasing. Researchers are interested in learning how inflation affects Filipinos,
particularly local business owners in our municipality. The researchers consider the
most common local businesses that Filipinos have, and choose the sari-sari store
because it has become an integral part of every Filipino's life. This will also help the
researchers as future business owners.