In this globalization era, inflation is one of the major challenges confronting most economies
around the world, affecting both developing and developed economies in a variety of ways. Inflation,
as defined, is a long-term rise in the general level of prices for goods and services in a given economic
currency, reducing the purchasing power of each unit of money. Inflation reflects a country's
currency depreciation (Avila, 2018). As a result, the real value of the unit of exchange within the
economy has decreased, which means that as the price level rises, each unit of currency buys fewer
goods and services.
Inflation reduces the purchasing power of each income earner, resulting in social and
economic instability. This conclusion has been strengthened by the studies of those who concluded
that inflation is detrimental to an economy's long-run growth, who identified the economic costs of
inflation as the erosion of the standard of living and the distortion of economic decision-making with
regard to investment, saving, and production, which ultimately leads to slower economic growth.
The dynamic rise in prices highlighted the impact of inflation on consumption. A stable
positive significant short and long-term relationship between inflation and consumer spending
behavior is revealed. Other studies have also attempted to determine how inflation affects consumer
behavior. Different components of aggregate consumption and different measures of expected
inflation are affected differently by inflation and nominal interest rates (Nyamekye and Poku, 2017).
In addition, during periods of high inflation, the consumption-to-personal income ratio may rise as
nominal interest rates rise, inflating the interest-bearing component of such income. This causes an
oversensitivity to consumption, but once inflation stabilizes, the impact of inflation on consumption
rapidly diminishes (Gatpolitan & Avila, 2018)
The annual inflation rate in the Philippines climbed to 7.7% in October 2022 from 6.9% in August,
topping market forecasts of 7.1%. It was the highest point since December 2008, being near the top end
of the central bank's target of between 7.1% to 7.9% for the month (TRADING ECONOMICS, 2022)
. Various factors internationally and domestically have led to the persistent increase of
inflation in the Philippines, the consistent rise in prices may cause havoc to the entire economy as
the currency loses its real value, and people may suffer as a result of it as a result of which wage
earners may demand a wage increase to compensate for the higher cost of living. Individuals living
standards have increased year after year.
This research, as a result, focuses on determining the perceived effects of inflation on
students at Cabanatuan City Senior High School for the 2022-2023 school year. In contrast to other
studies, however, that correlates with the real rate of inflation. This research endeavors to define the
effects of Inflation on students’ budget consumption for a year single period, based on students’
perceptions rather than the real rate of inflation. As a result, the purpose of this research is to examine
the methods, difficulties, challenges, and how they can still manage their budget amidst the inflation crisis
TRADING ECONOMICS. (2022). Philippines Inflation Rate - November 2022 Data - 1958-
2021 Historical. https://tradingeconomics.com/philippines/inflation-cpi
Nyamekye, G. E. & Poku, E. A. (2017). What is the
effect of inflation on consumer spending behavior in
Ghana? Munich Personal RePEc Archive, Paper No. 81081.
Bangko Sentral ng Pilipinas (2018). Monetary
Policy Decisions. Retrieved from
http://www.bsp.gov.ph/monetary/monetary.asp
