Question

1. By how much did the purchasing power of the peso decline from 2018 to the 2nd quarter of 2020? Note: The purchasing power of a consumer's dollar measures the change in the value to the consumer of goods and services that a dollar will buy at different dates. (SHOW STEP BY STEP SOLUTION) (CP1BASE DATE PP= ) -X 100 (CPI TARGET DATE) Consu Nominal GDP (current prices, million PHP) Real GDP (2018 prices, million PHP) Agri GVA (2018 prices, million PHP) Industry Services GVA (2018 GVA (2018 prices, prices, million million PHP) PHP) mer price Unemploy index ment rate (2012= Inflation (%) 100) rate (%) government government Exports revenues spending lion (million (million USD, PHP) PHP) FOB) Imports (millior USD, FOB) Exports (current prices, million PHP) year Imports (current prices, million PHP) 2018 18265190.3 18265190.3 1762616.5 5582525.3 10920048.5 5.3 117.30 5.2 2850184 3408443 5518572.51 7662209.00 2019 19516418.3 19368512.8 1783855.1 5843933.5 11740724.2 5.05 120.20 2.47 3137498 3797734 5530950.17 7858661.00 202001 5.3 (Jan. 4449293.19 4426039.66 round) 122.43 2.70 202002 17.7 (Apr. round) 4150524.16 4154829.62 122.47 2.30 10.0 (Jul round)

Answer 1

1. PP = (CPI base date *100) / CPI target date

CPI Base date for year 2018 = 117.30

CPI for target date 2nd quarter of 2020 = 122.47

PP = (117.30 *100) / 122.47 = 95.77%

Decline in purchasing power of peso = 100 - 95.77 = 4.23%

The purchasing power peso has declined by 4.23% from 2018 to the end of second quarter of 2020.