GROUP-6

MEMBERS:

JAMES ROLDAN HUMANGIT

JACOB RAPHAEL PERILLO

JOHN LANARD BUENAVENTE

LEE EDWARD ALCANTARA

 ECONOMIC ANALYSIS AND SOLUTIONS

Objective:
To determine the price effect on the commodities and services in economics

Materials
1. Access to economic data (economic report)
2. Writing material or computer for research and analysis
3. Presentation tools (e.g.., Powerpoint, Google slides)

Inflation

Inflation is perceived as “the enemy of society.” Inflation is described as the rise of prices
of goods and services in an economy over time—the continuous increase of inflation results in
lower market value of goods and services produced in the country. Therefore, there are
opportunities for the growth of the country [1]. The country's economic growth is at risk due to the
continuous rise in inflation. The unpredictable inflation rate of a country leads to changing prices
and market value. This issue affects the country’s gross domestic product and may result in an
inactive trading game and a slow growth rate of the economy.

Economic growth is when both total demand for spending could be in some form of
imbalance with the expansion of output, which, in essence, is the level of supply. As long as that
imbalance is not large, the process of growth and development is sustainable and within a range
of relative price stability.
 Research and Data Collection

Supply, demand, and government spending are the leading causes of inflation in all
markets. Prices rise due to "demand-pull" inflation, which occurs when an economy's total
inflation rate rises faster than the rate at which demand grows for goods. The same is true when
government expenditure exceeds economic growth, a situation known as "cost-push" inflation.
Cost-push inflation often occurs when governments invest money in projects or programs to
boost their economies but need more revenue from taxes or other sources to cover them. Similar
to this, prices rise when there is an excessive amount of money in circulation (sometimes
referred to as "monetary oversupply") because there is more competition among buyers for
scarce resources.

The Philippines, a tropical country, tends to be impacted by erratic weather fluctuations; as

a result, the Philippines' prices have risen to even higher levels. They are considering the lives of
the hungry, who have been the most affected, as they struggle to acquire food to survive. Fuel
inflation causes commuters' funds to go towards travel expenses rather than other purchases and
also affects the transportation of goods, leading to delayed cash flow. Furthermore, climate
change is a significant contributing factor. Due to its geographical location, the Philippines is
susceptible to frequent extreme weather events.

Over time, the country has experienced variations in its inflation rate. The country's central
bank, the Bangko Sentral ng Pilipinas (BSP), is dedicated to maintaining price stability and has
set an inflation target range. According to the Philippines Statistics Authority, the Consumer Price
Index (CPI) increased by 6.7% from 113.3% in August 2022. In August 2023, the National Capital
Region's (NCR) CPI stood at 122.5%, representing a 1.3% increase from its July 2023 index of
121.2%. The demand for goods and services, fluctuations in global commodity prices,
government policies, and other economic factors can all influence the inflation rate in the
Philippines. To ensure economic stability and long-term growth, the government and central bank
employ monetary and fiscal measures to control inflation within a specified range.
 Economic Principles

The Philippines’ headline inflation rate is from October 2022 to October 2023.
The headline inflation has reduced from 6.1 percent to 4.1 percent from the previous
month, resulting in an average inflation of 6.4 percent from January to October 2023
[9]
 The reduction in the overall inflation rate in October 2023 was primarily
attributed to the sluggish increment in the heavily weighted food and non-alcoholic
beverages at 7.0 percent. The food inflation rate in restaurants and accommodation
services also contributed to the downtrend, dropping 6.3 percent from 7.1 percent in
September 2023

Propose solutions

Monetary Policy: Central banks can use monetary policy tools such as interest rate
adjustments and open market operations to manage inflation. They can increase
interest rates to reduce money supply and curb inflationary pressures.
Fiscal Policy: Governments can use fiscal measures like taxation and government
spending to control inflation. They can reduce government spending or increase
taxes to reduce aggregate demand and inflationary pressures.
Supply-side Policies: Policies aimed at increasing the supply of goods and services
can help alleviate inflation. This can include measures to improve productivity,
remove supply chain bottlenecks, and encourage investment in key industries.
Wage and Price Controls: Governments can implement temporary wage and price
controls to limit the increase in prices. However, this approach is often seen as a
short-term fix and may have unintended consequences such as distortions in the
market.
Exchange Rate Policies: Managing exchange rates can influence import prices and
inflation. Governments can adjust exchange rates through

Cost-Benefits

Costs:

Reduced Purchasing Power: Inflation erodes the purchasing power of money,

meaning that the same amount of money buys fewer goods and services over time.
Uncertainty: High or unpredictable inflation can create uncertainty for businesses
and consumers, making it difficult to plan for the future.
Income Redistribution: Inflation can redistribute income and wealth in
unpredictable ways, benefiting some groups while harming others.
Interest Rate Volatility: Inflation can lead to volatility in interest rates, making it
harder for businesses to borrow and invest.

Benefits:

Stimulates Spending: Moderate inflation can encourage consumers to spend and

invest rather than hoard money, which can stimulate economic growth.
Debt Relief: Inflation reduces the real value of debt over time, providing relief to
borrowers.
Promotes Investment: Inflation can incentivize investment in assets like real estate
and stocks, potentially leading to higher returns.
Fiscal Stimulus: Inflation can reduce the real burden of government debt, making it
easier for governments to finance spending programs.