Inflationary impact of COVID-19: an analysis on different commodity groups in the Philippines
Date
2022-06
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Abstract
The COVID-19 pandemic induced disruptions in global value chains and domestic supply
chains, decreased business profits, and slowed economic growth that brought changes in
demand and supply. Given supply bottlenecks and consumption shifts that differ across the
different Philippine regions due to the varying severity of local cases, this paper studies the
movements and differences in prices across commodity groups during the COVID-19
pandemic. Two regression models were developed using the average monthly cases of
COVID-19 and inflation rates from March 2020 to December 2021 to determine the effects,
namely: (1) Baseline and (2) Regional Factor Model. The results show that only 6 out of 13
commodity groups have their prices exert a significant relationship with the number of
COVID-19 cases. Among the essential commodities, only food reveals a highly significant
negative relationship, while among the non-essential items, only alcoholic beverages exhibit
a strong negative correlation with the number of cases. Further, price movements for all items
and transport are found to be negatively associated with the number of cases, while clothing
and furnishings exhibit a positive relationship. Lastly, only 8.1% of the coefficients prove to
have significant inflation disparities with the National Capital Region (NCR). This study
recommends using one single estimator for more significant results, using other measures of
inflation and exploring other pandemic indicators such as vaccination, mortality, and recovery
rates.
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Keywords
COVID-19, pandemic, commodity