College of Sciences, Technology and Communications Inc.

Senior High School Department

A PHENOMENOLOGICAL STUDY

ON EFFECTS OF FOOD INFLATION

ON LOW-WAGE WORKER

A Research Paper

AS PERCEIVED BY THE SELECTED PARENTS

OF BARANGAY ZONE 4 PUBLIC MARKET

ATIMONAN, QUEZON.

In Partial Fulfillment of the Requirements

for the Practical Research

Lyka May S. Ostonal

Mary Jane Mxino

Tristan Patulay*

CHAPTER 1
A. RATIONALE OF THE STUDY

After the pandemic, many changes happened in our society, one of which was

the sudden increase in all prices and fares. The citizens were greatly affected,

especially those who did not earn enough money from their work. It is important to

study this topic to pay attention to the people who are suffering because of the price

increase and the little money they earn at work. Our study underscores the importance

of carefully examining the impacts of food inflation to formulate effective

anti-poverty programs, because every member of a family is affected by this topic.

Empirical work highlights that food inflation induces poverty, food insecurity and

reduction in expenditure on other important services such as health and education.

The present study investigates the impact of macroeconomic factors on food

price inflation in India utilizing the monthly time series during January 2006–March

2019. The long-run relationship is confirmed among the variables using the ARDL

bounds testing approach to cointegration. The main objective of monetary policy in

any economy is to maintain price stability. However, high food price inflation affects

not only macroeconomic stability but also small farmers and poor consumers of the

developing country where poor people spend their massive portion of income on food

consumption. Agricultural commodity price volatility negatively impacts all societies

by causing macroeconomic instability; specifically, it affects the impoverished that

spend a large portion of their resources on food and fuel. Therefore, high food price

inflation has become a significant concern among the researchers and policymakers in

determining responsible factors to surge in food price inflation. The high food price
inflation has been experienced in the recent period due to increasing demand for

biofuels in many developed countries, increasing demand for various diets among

newly prosperous populations as compared to the production of such foodstuff, rise in

minimum support prices, rapid regional economic growth, increasing the cost of

fertilizers and other inputs, rising oil prices, etc. (Samal 2022).

This study was conducted in order to focus on the employees who are affected

by inflation. Employers must gradually raise employee wages to ensure that

employees can provide for their families, because inflation reduces workers'

purchasing power, causing the low wage to deteriorate over time. Furthermore, the

study's findings may help workers manage and resolve issues during times of food

inflation and economic downturns. It may also assist consumers in understanding the

effects of the economic downturn on the performance of customer service offices,

shopping malls, and small businesses such as public markets.

A. STATEMENT OF THE PROBLEM

This study entitled “ A Phenomenological Study on Effects of Food Inflation on

Low-wage worker as perceived by the selected parents of Barangay Zone 4 public

market Atimonan, Quezon aims to determine the effects Food Inflation on Low-wage

worker.

1.What is the demographic profile of the respondents in terms of:

1.1 Age
 1.2 Sex

1.3 Occupation

2.What are the perceived effects of Food Inflation on Low-wage worker in terms of;

2.1 Health will be neglected

2.2 Food insecurity

2.3 Higher food costs

3. What implications can be drawn based on the results of the study?

B. THEORETICAL FRAMEWORK

Theoretically, rising food prices are basically due to two factors in the literature,

i.e., real and monetary shocks. These are explained by structuralist and monetarist

approaches, respectively. According to structuralists, the money supply is passive, and

the real shocks in a particular sector tend to upsurge in food price inflation. Hence,

inflation occurs in the prices of other goods. However, monetarists argued that

inflation could arise through an autonomous increase in money supply via generating

aggregate demand, which increases the relative price of commodities. Therefore, an

increase in money supply is a cause for inflation, not necessarily by real shocks.

The monetary theory of inflation asserts that money supply growth is the cause

of inflation. Faster money supply growth causes faster inflation. In particular, 1%

faster money supply growth causes 1% more inflation. With other things constant, the

price level is proportional to the money supply.

 However, the developing countries like India are not exceptional from higher

food prices and macro-economic instability. Since the 1991 economic reforms, the

Indian economy has maintained a single-digit economic growth rate and moderate

inflation. However, in recent years, one of the major problems that the Indian

economy is facing is higher food price inflation. The WPI food price inflation was

documented 10.20% during January 2008–July 2010]. Further, CPI-IW for food was

experienced at 8.05% during 2006–2019 while it was recorded at 13%, especially in

2013. However, the growth rate of gross food grain production was 2.66% during this

period. The demand for food commodities increases at a higher rate due to the high

economic growth rate (7–9%) per annum. In contrast, the annual growth of agriculture

is relatively low (1.5%) compared to the service sector and GDP growth . The total

investment in agriculture has been reduced from 2.43 to 1.28% during 1979–80 to

2007–08 period ]. The expenditure on subsidies, maintenance of existing projects, the

relatively lower allocation for irrigation, rural infrastructure and research, lack of

adequate credit support, and credit infrastructure in rural areas are the drivers of slow

growth in public investment in agriculture. Given this high food price inflation,

researchers and policymakers have raised severe concern about reducing the food

price inflation because most of the population spend half of the income on food

expenditure, and food containing a larger share in the CPI basket. Therefore, it is

necessary to find the causes and suitable majors to reduce food price inflation.

Inflation Targeting (IT) has gained much popularity in recent years, with fifteen

countries formally adopting it as a monetary policy framework since 2000. However,

in developing countries, where the contribution of food prices to headline inflation is

generally higher than in advanced economies, the adequacy of an IT framework for

curbing inflation is very much contested. In this paper, we use a

difference-in-differences approach to evaluate the treatment effect of adopting IT.

Controlling for reversion to the mean, we find that economies that function under an

IT regime do no better than countries that use alternative policy instruments. We

verify the robustness of these results using panel unit-root tests and find that food

inflation rates converge across economies irrespective of the monetary policy

framework implemented. ( Samal 2022 ).

There is a well-known proposition that a rise in inflation increases uncertainty

about future inflation. Okun (1971) expressed this proposition in the early 1970s.

Friedman postulated that rising inflation brought about by attempts to raise

employment, creates pressure to lower inflation and increases private agents’

uncertainty about future monetary policy and inflation. Inflation uncertainty reduces

the level of investment and economic activity and could be a primary influence of on

business cycle (Engle, 2004). In a market economy, inflation uncertainty reduces the

price system‘s efficiency in coordinating economic activity (Wilson, 2006). Friedman

states that the more uncertain inflation is to extract the signal about relative prices

from the absolute prices. Distorted prices misallocate resources, they lower the level

of economic efficiency and the rate of growth, thereby raising the unemployment rate

and finally welfare loss. When inflation is engrained in an economic system, it is

difficult and costly to lower it because inflationary expectations become inertial and
cannot be quickly and easily lowered to a sustainably low level. Ball (1992) puts a

case for the argument in a game theoretical framework where asymmetric information

holds. According to Friedman and Ball, higher inflation rates generate greater

uncertainty about the future policy so about future inflation rates. There are ample

empirical studies that examine the relationship between inflation and inflation

variability. There exists a positive relationship between inflation and its

unpredictability/uncertainty for a given level of investment, (Okun, 1971; Logue &

Willet 1976; Friedman, 1977; Taylor, 1981). They explained intuitively as higher

inflation may induce erratic policy response to counter it with consequent

unanticipated inflation movements. Okun (1971) first gave an intuitive explanation

for positive correlation between the level and variability of inflation. Okun’s

argument was based on the non-linearity of the Phillips curve. Positive association

between mean and variance of inflation has been extensively documented in the

literature; Since the 1970s, academics have started to give more attention to the

relation between inflation and its temporal variance. There is ample empirical

evidence of this relationship in economic literature. However, the theoretical

underpinnings of this area have not been rigorously investigated. Many empirical

studies provide evidence of the positive relationship between mean and variance of

inflation. For examples, Okun (1971); Logue and Willet (1976); Friedman (1977);

Taylor (1981); Evans(1991), Grier and Perry (1998); Nas and Perry (2000); Ball,

Cecchetti, and Gordon (1990); Cukierman and Wachtel (1979); Taylor (1981); Golob

(1993); and Daal, Naka, and Sanchez (2005) provided evidence in support of the
Friedman-Ball hypothesis. In contrast, Cukierman and Meltzer (1986) hypothesis is

supported by the findings of Holland (1995) and Baillie, Bollerslev, and Mikkelsen

(1996). However, existing literature on this issue has not yet been addressed the

relationship in context of food price inflation, in particular in developed or developing

countries including Sri Lanka. ( Am Mohamed Mustafa 2019 )

C. SIGNIFICANCE OF THE STUDY

This study identifies the Food Inflation on Low-wage worker as perceived by

the selected parents of Barangay Zone 4 public market Atimonan Quezon and hopes

to benefit the Government, Economic, Business owner, Researchers and Other

Researcher:

Government- The government is constantly implementing targeted subsidies and

discounts to mitigate the impact of higher food prices, particularly for vulnerable

sectors and low-income earners in our society.

Economic- This means less economic activity, less income generated by producers,

and lower economic growth for the economy.

Business owner- Supply pressures affect businesses because they pay more for

materials and products.

Researchers- According to the researcher, inflation is typically a broad measure, such

as an increase in overall prices or the cost of living in a country.

Other Researcher- It is critical to carefully examine and comprehend the study on

food inflation because it affects the lives or lifestyles of many people.

SCOPE AND DELIMITATION

This study will focus on the effects of Food Inflation on Low-wage worker as

perceived by the selected parents of Barangay Zone 4 public market Atimonan

Quezon. The goal of this study is to know the effects of Food Inflation on Low-wage

worker especially now the price will increase too much and it will not be enough for

the low wages.

This study will be conducted in Barangay Zone 4 public market Atimonan

Quezon for it is where the respondents are living. It will focus on five (5) randomly

selected of Barangay Zone 4 public market Atimonan Quezon parents only.

D. RESEARCH PARADIGM

INDEPENDENT VARIABLES DEPENDENT VARIABLES

Food Inflation Low-wage worker

Figure 1. INDEPENDENT- DEPENDENT VARIABLE MODEL.

The figure above shows the relationship between the food inflation which

served as the independent variable and the low-wage worker as perceived by the

respondents which served as the dependent variable of the study.

E. DEFINITION OF TERMS

Effects- a change which is a result or consequence of an action or other cause.

Food Inflation- the rise of prices that causes a decline in the power of the consumer

and producer to purchase goods over time while all other factors remain constant.

Food inflation is the rate at which the prices of food items increase.

Low-wage- wages lower than two-thirds of the median salary in the population.

Public Market- each shop or stall is owned and operated by a small independent

business. Unlike a supermarket, where one company sells everything, a public market

has dozens of vendors selling food and other products they make themselves.

Workers. This research could aid workers in managing and resolving issues during

food inflation and economic downturns. Consumers. This research could assist

consumers in understanding the consequences of economic crisis on the performance

of customer service offices, malls, and small business such as public market.

Health will be neglected- When food prices rise, it becomes unaffordable and out of

reach for these already struggling people, pushing even more people into self-inflicted

poverty.

Food insecurity- Food insecurity is associated with negative health outcomes in

children and adults, and it can cause problems for children in school and in other

areas.

Higher food costs- Rising food prices can have a significant impact on vulnerable

households, pushing the most vulnerable further into poverty and hunger.