Effects of Inflation Rate to Carinderia Owners in Bacarra

CHAPTER I

PROBLEM AND ITS BACKGROUND

Introduction

Inflation is the rate wherein there is a change or increase in the value of goods, products,

and services that are usually availed by consumers. It affects everything around us. It can

deteriorate the savings of people. It makes the value of the money a person saved today become

less valuable as time passes by. There are lots of reasons that cause inflation to happen, but there

are two main causes of inflation: Demand-pull and Cost-push. The demand-pull is the most

common cause of inflation, wherein consumer demand for goods and services increases so much

that it outstrips supply. Manufacturers can’t produce enough goods to meet the demand, thus

making the prices higher. The second cause is the cost-push inflation. It only occurs when there

is a supply shortage combined with enough demand to allow producer to raise prices. (Amadeo,

2019)

In many countries, inflation is usually influenced by factors beyond the control of

economic policy and has tended to be historically volatile. In the Philippines, the volatility of

inflation has been caused by factors such as disturbances in agricultural food supply or

movements of international oil prices. As a result, the inflation rate may reach double-digit

levels, even though the prices of other goods only increased a little. As cost of goods and

products are continuously increasing in our country, salaries are still fixed, making it hard for

Filipinos to cope up with the changes happening in the economy.

 Carinderia is a very famous small business in the Philippines. It is a local eatery selling

and serving affordable viands to the masses. It is also known as “turo-turo” wherein customers

literally point what they want to eat. There is no place to go without seeing different carinderias

around. Carinderias are usually home-based, wherein different home-cooked meals are being

sold. It is where people, especially students, usually go to eat during work or classes, since they

offer variety of viands in a cheap price.

Carinderias are very affected with the inflation that is occurring in our country. A lot of

micro-retail businesses are complaining that the rising of cost of goods affected their earning,

because customers are cutting down on consumption. According to Vicky Aguinaldo, President

of the Philippine Association of Stores and Carinderia Owners, the continuing inflation rate

might cause small business to shut down. It is reported that food and non-alcoholic beverages

climbed to 9.7%, according to The Philippine Statistics Authority. In Ilocos Region, inflation in

food has reached up to 13.6%. Other carinderia owners worry that they are only earning half of

what they usually earn on their daily sales before the inflation took place and is facing the verge

of shutting down their businesses soon after.