Professional Documents
Culture Documents
Researchers:
Ballitoc, Mikyla
Carino, Honey Dwaine Z.
Co, Jose L. Jr
Fagyan, Chamla Myrth
Ngallawen, Christianie
Paspas, April Rose
(Accountancy Business and Management-12)
Submitted to:
Ma’am Agustina Padong
Practical Research Teacher
A QUANTITATIVE STUDY ON THE EFFECTS OF INFLATION TO DUMALSIN
ENTERPRISE AND KIMAKIM TRADING
CHAPTER 1: INTRODUCTION
I. BACKGROUND OF THE STUDY
The economic landscape of Bontoc, Mountain Province, has recently witnessed a significant
and abrupt rise in product prices, particularly at two prominent grocery stores, Dumalsin Enterprise
and Kimakim Trading. In August 2023, the annual inflation rate in the Philippines unexpectedly
surged to 5.3%, surpassing July's 16-month low of 4.7%, as reported by the Philippine Statistics
Authority. This latest figure exceeded market expectations of 4.7%, with the most significant increase
occurring in food prices, which rose by 8.1% compared to July's 6.3%. The rise in inflation outside the
National Capital Region was primarily driven by a higher year-on-year increase in heavily-weighted
food and non-alcoholic beverages, climbing from 6.1% in July 2023 to 7.7% in August 2023.
Following closely was the transport sector, which saw an annual increase of 1.0% in August 2023, a
significant shift from the annual decline of -3.3% in July 2023. This phenomenon has raised critical
questions about how inflation impacts businesses in the local community. The research aims to delve
into this pressing issue and explore the intricate relationship between inflation and the operations of
these establishments.
In addition to examining the effects of inflation, this study will also investigate the various
marketing strategies employed by Dumalsin Enterprise and Kimakim Trading to sustain their income
and profit during times of inflationary pressure. The research will shed light on the measures taken by
these businesses to navigate the challenging economic landscape, including how they manage their
operations and monitor cash flow to remain resilient in the face of inflation.
Furthermore, this study will not only focus on inflation as the sole determinant of income
fluctuations for these businesses. It will also explore other factors that contribute to variations in
income, aside from inflation. Additionally, the research will aim to identify the seasonal patterns during
which these businesses reach their peak performance, allowing for a comprehensive understanding
of the multifaceted factors affecting their financial stability in Bontoc, Mountain Province. In
conclusion, the results of the conducted survey will undergo thorough analysis using Inferential
Statistics. Our primary objective is to ascertain the existence of significant connections, patterns, and
trends between Dumalsin Enterprise and Kimakim Trading in relation to inflation, shedding light on
The economic stability and resilience of businesses, particularly Dumalsin Enterprise and
Kimakim Trading, in the community of Bontoc, Mountain Province, have recently come under scrutiny
due to a notable surge in inflation. This phenomenon raises fundamental questions regarding the
impact of inflation on these businesses and the strategies they employ to sustain their income and
profit amidst inflationary pressures. Specifically, this study aims to answer the following questions:
2. What are the different marketing strategies employed by Dumalsin Enterprise and Kimakim
3. How do Dumalsin Enterprise and Kimakim Trading manage their business operations and
4. What are the additional factors, beyond inflation, that contribute to fluctuations in the
5. At which specific seasons do Dumalsin Enterprise and Kimakim Trading experience peak
The proposed study on the effects of inflation to two biggest groceries at Bontoc, Mountain
Province will be significant as it highlights the roles of the business and the private sectors through
the analysis of the experiences of the business actors and consequently opens opportunities for
They will directly benefit from this research. They will emulate the best practices and learn
strategies from the experiences of the subjects of the study in relation to inflation and running their
own businesses;
businesses. The knowledge of the plight of the businessmen will also help them develop programs
The experience in this project would open doors for self-improvement, career preparation, and
research will give them an appreciation of research work and use this knowledge as an edge in all
endeavors;
This study will provide baseline data for future researches on the topic of research. Adding to
the body of knowledge, the results of the study may serve as a reference, a related literature, and a
The general intent of this study is to determine the correlation between inflation among the two
prominent groceries in Bontoc, Mountain Province, Dumalsin Enterprise and Kimakim Trading for the
year 2023. As the business’ main source of income is its customers, this study will also look into how
the business functions during its peak season, on what time of the year does it usually strike and
what does the business aim to do in order for them to give the consumers what they need.
The main source of data in this study will be the business owners, with both answering the
same survey question to see, compare, and contrast to determine how both businesses are surviving
with the sudden changes of inflation rate. Information to be gathered will only be limited to questions
referring to the business, no personal questions involved. The researcher will conduct the study on
Bontoc, Mountain Province and will be able to produce a published copy of the research in a span of
2 months after the release of consent to conduct the study from the school principal’s office.
A. On Inflation
In the research study of Sulit, R. (2018) entitled “Research Paper - Inflation Rate in the
Philippines” he stated in his Review of Related Literature that according to Amadeo, K. (2018),
inflation in a general manner affects the behavior of every person. Our choice to purchase a single
product will vary for the reason that the cost of the same product we bought a month ago may be
different from its current price, which basically is a result of inflation. Inflation is the rising price of
Meaning: What Triggers Rising Inflation In the Philippines,” according to such, inflation is an
economic phenomenon that occurs when the general price level of goods and services increases. It is
usually measured by the Consumer Price Index (CPI) or Producer Price Index (PPI). When prices
rise, consumers have to pay more for goods and services, leading to a decrease in purchasing
power. The annual percentage change in consumer prices measures it. In other words, inflation is a
sustained increase in the average price level of goods and services bought by households.
From the definitions stated above, inflation, as explained by Amadeo (2018), is the continuous
increase in the general price level of goods and services, affecting everyone's spending choices.
Vista Residences (2022) adds that it's measured by the Consumer Price Index (CPI) and erodes
purchasing power when prices rise. In essence, inflation reflects the persistent rise in average prices,
a. Food Inflation
According to an article by Janice Sabitsana (2018), she defines food inflation as a sustained
increase in the prices of food items that can be caused by a number of factors, including the rise in
fuel prices, the weakening of local currencies, and bad weather conditions that disrupt the supply of
food.
To further explain such, an article from Magic Breakfast (2023) writes that food inflation is the
gradual increase in the pricing of food products and items. It is a subset of total inflation that only
considers the cost of food in an economy. Food inflation can be driven by a variety of factors,
including changes in agricultural production costs, supply and demand dynamics, meteorological
conditions affecting crop yields, transportation costs, and government policies such as food import
subsidies or tariffs. High food inflation can have a severe impact on consumer budgets and increase
food costs, potentially threatening food security and general economic stability.
b. Cost-Push Inflation
According to an article in The Economic Times, cost-push inflation is defined as an inflation
caused by an increase in prices of inputs like labor, raw material, etc. The increased price of the
factors of production leads to a decreased supply of these goods. While the demand remains
constant, the prices of commodities increase causing a rise in the overall price level. In this case, the
overall price level increases due to higher costs of production which reflects in terms of increased
prices of goods and commodities which majorly use these inputs. This is inflation triggered from the
supply side i.e. because of less supply. Apart from rise in prices of inputs, there could be other factors
leading to supply side inflation such as natural disasters or depletion of natural resources, monopoly,
government regulation or taxation, change in exchange rates, etc. Generally, cost push inflation may
occur in case of an inelastic demand curve where the demand cannot be easily adjusted according to
rising prices.
According to Lioudis (2023), crude oil is a major economic input, so a rise in oil prices contributes
to inflation, which measures the overall rate of price increases across the economy. Cost-push
inflation can be directly influenced when the price of a key economic input, like crude oil, rises
significantly. This kind of inflation happens when increased costs for raw materials, like oil, have an
impact on production costs and are then passed on to consumers as higher prices for goods and
services. In this instance, cost-push inflation is demonstrated by the rising costs of fuels like petrol
and diesel, as defined by SIPFund. As fuel prices rise, transportation costs and production costs for
various industries rise as well, pushing up prices across the economy as a whole. As a result, the
relationship between rising oil prices and inflation as a whole fits the definition of cost-push inflation,
where supply-side factors are responsible for the overall rise in price levels.
c. Demand-Pull Inflation
increase in aggregate demand, and the supply remains the same or decreases. When supply cannot
meet growing demand, prices for goods and services are pulled higher.
In support of the general definition aforementioned is a synthesis of the definitions from Chen
(2022) and Amadeo (2022) which state that demand-pull inflation is a macroeconomic phenomena
defined as an increase in the general price level of goods and services within an economy as a result
of excessive demand exceeding sufficient supply. This sort of inflation arises when aggregate
demand for goods and services becomes so strong, as a result of factors such as increased
consumer spending, company investment, or government spending, that it exceeds the capacity of
producers to supply this increased demand. As a result of this rise in demand, businesses may
respond by raising their prices, and this upward pressure on prices throughout many sectors of the
To further understand inflation and its effects, the researchers also conducted a literature
review and a synthesis on the said topic. As a pervasive economic phenomenon, inflation has a
significant and multifaceted effect on businesses of all sizes, but its effects are especially noticeable
for small and large local businesses. In recent years, there has been a lot of scholarly interest in the
complex interaction between inflationary pressures and business operations. This section begins with
a thorough investigation of how inflation affects both small and large local businesses, shedding light
on how these companies deal with the difficulties posed by rising prices, changing consumer habits,
According to the study of Ibrahim and Ali (2018), the labor unions press employers to grant
wage increases considerably, thereby raising the cost of production of commodities. Employers in
turn, raise prices of their products. Additionally, the increase in prices induces unions to demand still
higher wages.
As reported in NFIB’s monthly jobs report, twenty-three percent of small business owners
reported that inflation was their single most important business problem, up two points from last
month. The net percent of owners raising average selling prices increased two points to a net 27%
(seasonally adjusted). The same report says that as an effect, two percent of owners reported that
financing was their top business problem. A net 24% of owners reported paying a higher rate on their
Affirming the information stated above, Webster (2023) stated in his article published by
Forbes entitled, “Inflation Affects More Than Just Small Businesses’ Bottom Lines,” that the current
inflationary trends are making it more expensive for small businesses to offer their goods and
services at competitive prices. That leaves managers and owners with a choice: Eat the extra costs,
or increase prices. While eating the additional expenses is never a fun decision, raising prices in
Webster (2023) also added that when inflation is out of control, it affects just about every area
of a business resulting in higher utility and equipment costs, rent or leasing increases and greater
transportation costs. In addition to the affected direct costs, inflation also affects the business’
approach to its daily, programmatic, and annual operations. As it affects the business’ operations, it is
also affecting the business’ internal decision resulting in the cutting off of extra expenses allotted for
non- mandatory training, terminating products or service offering and opting for less expensive
materials.
With these changes happening inside the business, Webster (2023) also stated that inflation
affects the employees of small local businesses leading to freezing hiring or prohibiting overtime
hours for employees, laying off staff, reducing shifts or assigning fewer weekly hours, delaying
personnel decisions, such as awarding promotions or bonuses, and requiring salaried employees to
With rising prices, consumers may be more inclined to try and purchase more quickly before
prices rise faster. With rising prices, it can create more confusion over which prices are good value. It
could lead to costs of consumers looking around different shops comparing prices, this is known as
including increased expenses in utilities, equipment, rent, and transportation, leading to decisions like
According to an article by Nelson (2022), big local businesses may be significantly impacted by
inflation in a number of ways. First of all, as the cost of labor, raw materials, and other necessary
inputs rises, it may result in higher operating costs. These rising costs may strain profit margins and
have an impact on overall profitability. Additionally, inflation has the potential to reduce both
consumer and business purchasing power. As consumers cut back on spending or switch to less
expensive alternatives, big businesses may find it difficult to maintain their competitive edge.
customer affordability. Large local companies frequently adjust their pricing strategies, look into cost-
cutting options, and closely watch their supply chains to counteract these effects.
In support of this, Oliveros (2022) writes that, by influencing their investment choices, large
local businesses can also be put under stress by inflation. High and erratic inflation can discourage
This hesitation could limit their capacity to innovate and effectively compete. The impact of inflation
on interest rates can also have an impact on the financial stability of large local businesses. Interest
rates are frequently increased by central banks to fight inflation. This could result in higher borrowing
costs for companies with outstanding debt, which could increase debt servicing costs. Inflation can
also make managing a workforce more difficult. Workers might ask for higher pay in order to keep up
with the rising cost of living. If big businesses are unable to offer competitive compensation packages,
Numerous factors, including cost structures, pricing strategies, investment choices, financial
stability, and workforce management, are impacted by inflation on big local businesses. These
companies must use adaptable strategies that include financial planning, flexible pricing, and careful
environment.
In order to give deeper understanding about the research study, the researchers were able to
identify theories that can help explore the aspects of inflation and its relation to Dumalsin Enterprise
Inflation”, it was stated that there are three main theories of inflation which are: Market-Power Theory
According to the article, in an economy, when a single or a group of sellers together decide a new
price that is different from the competitive price, then the price is termed as market-power price. Such
groups keep prices at the level at which they can earn maximum profit without any concern for the
purchasing power of consumers. According to the advanced version of market power theory of
inflation, oligopolists can increase the price to any level even if the demand does not rise. This hike in
price levels occurs due to increase in wages because of trade unions in the oligopolistic industry. This
increase in wages is compensated with the hike in prices of products. With increase in the income of
individuals, their purchasing power also increases, which further results in inflation.
Supporting the statement above is a study entitled “Market Power Amplifies the Price Effects of
Demand Shocks” by Menezes and Quiggin (2022), where it was noted that even in the absence of
adjustment costs, inflationary shocks may generate price variation as a result of profit-maximizing
behaviour by firms with market power. The purpose of this note is to offer a complementary set of
results concerning the relationship between market power and inflation, emphasizing the roles of both
demand and cost shocks. In the study of St. Pierre, M. (2023) entitled “On Market and Inflation” he
cited the study of Menezes and Quiggin (2020) which showed that the less competitive the market,
the steeper the industry supply curve. Indeed, even under conditions of constant marginal cost, where
the competitive supply curve is horizontal, the strategic industry supply curve under imperfect
According to the market power theory of inflation, inflation exists even when there is no excess in
demand but on the other end, the conventional demand-pull theorists believed that the only cause of
inflation is the excess of aggregate demand over aggregate supply as stated in the same article.
Proving these claims is the work of JT, Addison and J, Burton (1980) entitled “The Demise of
Demand-Pull and Cost-Push in Inflation Theory” wherein they stated that among the demand-pull
theorists, the general consensus was that the primary cause of the current inflation lay in the
persistent upward shifts of the aggregate demand schedule against the relatively more stable
aggregate supply function. There, resulted an inflationary gap of aggregate demand over supply,
such that the price level was continuously “pulled” up by the normal operation of market forces. Then
it was concluded that the source of the current inflation was attributed to the movements on the
To give justification and further understanding to the said information above, Shaikh, P.,
Muhammad F., and Khan, S. (2022), stated in their research study entitled “The Dynamic Theories of
Inflation” that the demand-pull inflation hypothesis is well-known and extensively used as a
component ofinflation categorization. The demand-pull theory is sub-divided into the Keynesian views
and monetarist views (Ndidi, 2013). The theory of demand-pull inflation is described as "inflation
occurring when a country's aggregate demand grows or when the economy's growth accelerates
above its long-run growth rate." A rise in any of the components in the theoretical equation,
consumption, investment, and government spending C+I+G+NX, is responsible for this. The sooner
the economy suffers from a large imbalance between aggregate demand (AD) and aggregate supply
(AS), which manifests as excessive demand, the faster demand-pull inflation emerges.
Inflation”, it was stated that the Structural Theory of Inflation is related to the effect of structural
factors on inflation. A structural analysis attempts to recognize how economic phenomena and finding
the root of the permanent disease and destruction such as inflation that evaluates lawful relationship
between the phenomena. He later then stated that the economic structural factor causes supply
slow. In this study, the rapid and faster growth of the service sector that is related to population
growth and immigration is another inflationary factor, which is more emphasized by the structuralism
wherein the group that does not fine necessary for changing the present policy foundation for
eradicating inflation, with the control of inflation through government intervention in the market
structure. Alongside this, the national income is also stated as one of the main factors of the hidden
inflation in the developed investment countries. Supporting his claim is the research study of B.T.,
McCallum entitled, “Inflation Theory and Evidence” wherein he stated that, from this viewpoint,
inflation is the manifestation change of economic and society is chosen from the fast, dynamic growth
of economy.
INPUT
PROCESS PROCESS
The research is A structured The results of the
intended to know the questionnaire will be questionnaires will be
cause and effects of given to the owners of analyzed through
the increase of inflation Dumalsin Enterprise Correlation and
rate to Dumalsin and Kimakim Trading Regression Analysis to
Enterprise and to gather efficient data come up with an
Kimakim Trading. The that can contribute to effective Research
owners of the said the success of the Paper entitled, “A
businesses will be research study. quantitative study on
answering the
Private Information the effects of Inflation
questionnaires made
and answers given by to Dumalsin Enterprise
by the researchers.
This figure represents the steps the researchers will take in order to accomplish a successful
research paper. In the input box contains the respondents of the research which are the
business owners of Dumalsin Enterprise and Kimakim Trading. Then, in the process box
contains the data gathering tool to be used in the conduction of the research which is a
structured questionnaire wherein the respondents are rest assured that everything is kept
confidential. Lastly, in the output box wherein the researchers must be able to accomplish a
good research paper as their product. This research paper contains reliable information about
the cause and effect of inflation to the 2 groceries providing the readers deeper knowledge
I. RESEARCH DESIGN
The descriptive and quantitative research design will be used in this study. According to
Kenton (2020), this method is a technique that uses mathematical and statistical modeling,
measurement, and research to understand behavior. This method provides analysts with tools
to examine and analyze past, current, and anticipated future events. Any subject involving
numbers can be quantified. With this method, information describing the effects of inflation on
The study will come up with recommendations to be used by policy makers in coming up with
In the conduction of this research study, we will involve and be focused on 2 of the
most prominent grocery stores in Bontoc. These businesses are known to have been in the
market for decades and were able to survive and maintain their sales with all the economic
challenges of the country, which automatically makes them a very reliable source of
information that can contribute to the success of this study. Specifically, the respondents
which are the business owners of Kimakim Trading and the Dumalsin family businesses will
To understand how these 2 prominent grocery stores in Bontoc have handled the
effects of inflation, the researchers will create a set of questionnaires that will be sent to the
business owners of the said grocery stores. The results will then be tabulated and analyzed
Before floating the questionnaires, the researchers must first consult to their subject
teacher for approval. Afterwards, they will send a request letter to the school principal to
conduct the data collection in order for the researchers to carry out the study. When
approved, the researchers will then approach and ask the consent of the owners to send the
questionnaire. Upon the approval of the respondents, the researchers will explain the purpose
of the study and that their identity and answers will remain confidential as protected by the
Republic Act no.10173 or the “Data Privacy Act”, wherein it is stated by the National Privacy
Commission that it is “an act protecting individual personal information in information and
communication systems in the government and the private sector, creating for this purpose a
national privacy commission and for other purposes”. As stated in Article 1, Section 2 of the
Republic Act that the state recognizes the vital role of information and communications
technology in nation-building and its inherent obligation to ensure that personal information in
information and communications systems in the government and in the private sector are
secured.
In this study, the results of the questionnaires will be analyzed through Inferential
Statistics. According to Jansen, D. MBA and Warren, K. PhD (2020), stated in their article
entitled “Quantitative Data Analysis 101, The lingo, methods and techniques, explained
simply” inferential statistics aim to make inferences about the population. In other words,
inferential statistics (when done correctly), allow you to connect the dots and make
predictions about what you expect to see in the real-world population, based on what you
observe in your sample data. For this reason, inferential statistics are used for hypothesis
There are many, many different statistical analysis methods within the inferential
branch but the researchers chose Correlation and Regression Analysis to further understand
the data provided. According to the article, Correlation Analysis assesses the relationship
between two variables. In other words, if one variable increases, does the other variable also
increase, decrease or stay the same, while Regression Analysis is quite similar to correlation
in that it assesses the relationship between variables, but it goes a step further to understand
cause and effect between variables, not just whether they move together. In other words,
does the one variable actually cause the other one to move, or do they just happen to move
together naturally thanks to another force? Just because two variables correlate doesn’t
Therefore, for the data to be tabulated, analyzed and recorded efficiently the stated
data analysis processes will be used to determine the correlation between inflation to both
Dumalsin Enterprise and Kimakim Trading while also understanding what are the causes and
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