Analyzing Inflation Trends in Key Commodities in the Philippines: A Study Based on Bangko Sentral ng Pilipinas Data Using ARIMA Forecasting

Economics Research

Inflation is a sustained growth in general price levels triggered by demand-pull and cost-push factors, diminishes the purchasing power of money, impacts different economic sectors, and significantly affects household budgets and general economic stability. This study aims to analyze and forecast inflation trends in the Philippines and focuses on essential commodities using the Auto-Regressive Integrated Moving Average (ARIMA) model. The study uses historical data from the Bangko Sentral ng Pilipinas (BSP) spanning 2014 to 2023, covering the following 12 key commodities: food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas, and other fuels; furnishing, household equipment, and routine household maintenance; health; transport; information and communication; recreation, sport, and culture; education services; restaurant and accommodation services; and personal care and miscellaneous goods and services. The ARIMA model forecasts the inflation rates in these commodities and predicts the trend over the next ten years while offering indications for analyzing the inflationary trends and their long-term projection. The results indicate that inflation affects different sectors in varying degrees, such as food and transport, which are experiencing significant fluctuations. Some commodity groups gradually stabilize while others remain uncertain, with food and transportation having the most significant fluctuation and notable inflation rate increase. Other sectors, including housing and utilities, remained uncertain, as inflation rates were expected to remain volatile. Other sectors were described to stabilize progressively, while services and nonessential goods followed the track of more predictable inflationary trends. The findings evidence-based strategies that policymakers may seek to mitigate the adverse impacts of inflation toward long-term economic resilience for Filipino households and businesses.

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