INFLATION RATE INCREASE: ITS IMPLICATION TO

THE FOOD VENDORS AT

SANTA MARIA PUBLIC MARKET
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A Thesis Presented to Senior High School department of
Fortunato F. Halili National Agricultural School
Guyong, Santa Maria Bulacan
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In Partial Fulfillment of the Requirements for
Mr. Gabbi Antonio in Practical Research II
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By:
Amelia David
Chelsea Cruz
Ellaine Garcia
Rica Mae Magdato
Shephiela Mae Enriquez
Jamaica Bartolay
Jerie Mae De Castro
Meryl Manabat
Riejel Duran
Alexis Concensino

Accountancy, Business and Management 2018-2019

CHAPTER I
INTRODUCTION
Background of the Study
Inflation is a quantitative measure of the rate at which the average price levels of a basket of selected goods and
services in an economy increase over a period of time. Often expressed as a percentage, inflation indicates a decrease
in the purchasing power of a nation currency, as the price rise, they start to impact the general cost of living for the
common public and the appropriate monetary authority of the country like the central bank, then takes the necessary
measures to keep inflation within the permissible limits and keep the economy running smoothly.
Market is defined as the place where the consumer and supplier transact. Market is where trading of goods and
services in the exchange of money happen. It includes determining the price of the product and communicating the
information of the price. Inflation nowadays has a big impact on the market due to the falling of their stock. Rising
inflation makes the prices higher that makes the consumer buy less then it makes the profit in the market less.
This will focus on the effects of increase in inflation rate to the vendors of Santa Maria Public Market. This
Increase in inflation affects our daily lives especially when we talked about the prices of foods in the market. Due to
this many businesses are at risk and about to go bankrupt. If we costumer are affected to this increase what more on
the side of the food vendors and business itself? How does this increase in inflation becomes a burden in the side of
the food vendors?
 According to Prof. Otto Eckstein, the direct relationship between wages and prices of product is the main cause
of inflation. In other words, inflation takes place when there is a simultaneous increase in wages and prices of
product. However, he believed that wage push or market power theories alone are not able to provide clear
explanation on inflation. He advocated that concentration of demand for products of industries result in inflation as a
result of this inflation business and consumers are highly affected (ezinearticle.com,2006).
The purpose of this study is to show different effects of increase inflation rate to the Food vendors of Santa Maria
Public Market. This study will provide idea about how inflation affects the operation and profit of the business and
why inflation serves as a huge burden in every vendor’s life.
Statement of the Problem
This study aims to explore the effects of increased inflation rate to the food vendors at Santa Maria Public
Market.
Specifically, it sought to answer the following question.
1. What foods are sold among the food vendors in Santa Maria Bulacan?
2. How many percentage in the price increase of food?
3. Do price increased or decreased the profit of the vendors?
4. What implication of the inflation rate increase among food vendors based on the data gathered?
Scope and Delimitation
This study is focused mainly on the implication of the increasing inflation rate on the food vendors in Santa
Maria Bulacan Public Market. It includes the factors affecting the profit of the food vendors and the perceptions of the
vendors with the inflation. The researcher will survey a total 50 respondents from different food stalls. This study is
limited only to the food vendors of Santa Maria Public Market. The Selected food vendors will be given some set of
questionnaire and the data gathered will be treated statistics.

Significance of the Study

The outcome of this study will provide information among food vendors the idea, so that they can cope up with
the negative effects of inflation.
This study will help the local government in knowing the effects of inflation rate on the profit of the food
vendors. They will also gather information on how the food vendors adapt and adjust to the inflation and charges in
the market.
This study will help the future researcher who’ll conduct a study that has a connection with the said issue. The
research will guide them, give them information and idea.
CHAPTER II
REVIEW OF RELATED LITERATURE AND CONCEPTUAL FRAMEWORK
This chapter includes the review of related theories, related literature and related studies in order to gain a guide
present and helps you to investigate the problem involved. It also includes the conceptual framework and definition of
terms used in the study.
This study is anchored on different theories about inflation. One of which is the Battle-Neck Inflation theory that
is proposed by Prof. Otto Eickstein. According to him, the direct relationship between wages and prices of product is
the main cause of inflation. In other words, inflation takes place when there is a simultaneous increase in wages and
prices of product. However, he believed that wage push or market-power theories alone are not able to provide a clear
explanation of inflation (ezinearticles.com,2006).
Another theory is the Keynesian Demand-pull inflation Theory which states that aggregate demand persistently
exceeds aggregate supply when the economy is near or at full employment. Aggregate demand food rice because of
several reasons. A cut in personal income tax would increase disposable income and contribute to rise in consumer
expenditure. A reduction in the interest rate might encourage an increase in investment as well as lead a greater
consumer spending on consumer durables. A rise in foreigner’s income may lead to an increase in exports of a
country. An expansion of government spending financed by borrowing from the banking system under conditions of
full employment is another cause of inflation (ezinearticles.com,2006).
 According to Agwu & Carter (2014), "Among the four P's, Price is the only income generator and it is the value
within the product. Besides price is the amount of money charged for a product or service. It is the total of all the
values that customers give up in order to gain the benefits of having or using a product (Kotler et.al.2010). Baker
(1996) noted that price is the mechanism which ensures that the 2 forces (demand & supply) are in equilibrium.
According to Santon (1981) price is simply an offer or an experiment to task the pulse of the market. It is the
monetary value for which the seller is willing to exchange for an item (Agbonifoh et.al., 1998). Ezedu (2004) argues
that price is the exchange value of goods and services. Schewe (1987) defines price as what gives up in exchange for
a product or service (ijrmst.org,2014).
According to an article rappler.com (2018) Inflation or the circulation of prices of basic goods and services, hit
the top quarterly average since 2014 as the tax reform law. Higher oil prices, low value of peso and the tightening of
the United States monetary policy took their toll. In a recommendation last April 20, 2018 Bangko Sentral ng
Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the average of inflation rate on the 1st quarter of 2018 is
3.8%.
For the period of January-March the inflation this year became faster than the 3% average inflation in 4th quarter
of 2017, and the 3.2% average inflation in the 1st quarter 2017. It also impends the upper end of the BSP's initial
target of between 2% and 4% for this year.
The country's inflation rate rose 6.4% in August and 6.7% in September 2018, according to the Philippine
Statistics Authority (PSA). For over 9 years the highest inflation rate happens on the month of September. It was also
9th successive monthly inflation rate increase, which started in January 2018. The government's economic managers
and some businessmen said that the recent inflation levels are "mere hiccups" and are "manageable".
 According to a news report on GMA network, as inflation rises the value of peso becomes lower, as people are able to buy less product and services for
the amount. The rate in which CPL changes refers to inflation rate. Some of the top contributors of inflation includes the prices of rice, vegetables, meat,
electricity, gas, and tobacco. In addition, food pricing has adverse impacts on the intake of rural household, especially poor-lows-income groups. The purely
farming groups and minorities who possess lower capacity to self-adjust are more vulnerable to rising food prices (ageconsearch.imm.edu,2018).
It is one of the most important elements of the marketing mix as it is the only one that generates revenue for the firm unlike the others that consume
funds (Agwu and Carter 2014). Lovelock (1996) suggested that pricing is the only element of the marketing mix that produces revenues for the firm, while
all the others are related to expenses. Diamantopoulos (1991) also argued that, - price is the most flexible element of marketing strategy in that pricing
decisions can be implemented relatively quickly in comparison with the other elements of marketing strategy. It is capable of determining a firm's market
share and profitability. Kellogg et.al. (1997 p.210) point out: - If effective product development, promotion and distribution sow the seeds of business of
business success, effective pricing is the harvest. Although effective pricing can never compensate for poor execution of the first three elements, ineffective
pricing can surely prevent those efforts from resulting in financial success "Typically, pricing strategies that are investigated in the marketing literature
consist of analyzing aggregated prices (Tellis 1986). For consumer goods, this is applicable unlike the several types of disaggregate pricing strategies that are
utilized to promote products are favorably as possible (Eliashberg et.al 1986). These consumer products usually have small prices that are paid up at once.
Disaggregate pricing means paying in bits for instance reframing a N500 expense into N1.40 a day expense diminishes the enormity of the expense, and
therefore, eases the decision process for the consumer. This however does not apply at all to consumer goods therefore appropriate pricing strategies which
are aggregate must be adopted to ease the decision making process of consumers. Traditional pricing strategy by definition is in capable of harmonious
associations, but it needs to become a more socially conscious, collaborate exercise. Bertini and Gourville (2012) stressed that businesses should look beyond
the mechanics of just fixing prices they feel is suitable for a product having estimated cost and profit still relevant but no longer sufficient and recognize that
harmonization of the way they generate revenue can open up opportunities to create additional value. This study therefore has dual purposes which are to
assess the effect of pricing strategies on the purchase of consumer goods and how the advent of online pricing interferes in the above.
The annual inflation rate in Nigeria as of November 2018, rose to 11.28% from 11.26% in last month. Prices advanced faster mainly suitable to higher
cost of food and housing and utilities. Inflation rate in Nigeria averaged 12.47% from 1996 up to 2018, pass an all the time high of 47.56% in January of
1996 and list the low of -2.49 percent in January of 2000 (tradingeconomics.com,2018).
According to a news report on ABS-CBN, after seeing prices roll already an unbelievable 1000 percent last year, in Venezuela's the hyperinflation
implode economy is set to hit almost 1.4 million percent this year, the International Monetary Fund forecast in its World Economic Outlook released on
Monday.
But in 2019, it’s expected that the hyperinflation leave the earth's orbit, hitting 10 million percent, a figure so large unable, the report of readers had to
count zeros to make sure they had the correct number. It is so bad Venezuela was left out on the calculations of the inflation for the region and for all
emerging marketing since it would throw off the average (news.abs-cbn.com,2018).
CONCEPTUAL FRAMEWORK
This study will focus at the implication of increase inflation rate to the food vendors in Santa Maria Bulacan.
This study also shows the participants understanding about the issue. The conceptual framework that guided the
researchers in this study is presented in figure 1.

DEPENDENT
INDEPENDENT
VARIABLE
VARIABLE
Increased awareness on the
Assessment of the food
implication of inflation rate
vendors profit after the
increase to the profit of food
inflation rate increase.
vendors.

Figure 1. Research Paradigm

Figure 1 represent the paradigm of the study. It consist of the independent variable and the dependent variable of
the study. The independent variable deals with the assessment of the food vendors profit after the increase of inflation
rate. The dependent variable deals with the increased awareness on the implication of inflation rate increase to the
profit if food vendors.
 Definition of terms
Hyperinflation. Ruinously high increase (50 percent or more per month) in prices due to the near total collapse of a
country's monetary system, rendering its currency almost worthless as a medium of exchange
(businessdictionary.com,2019).
Inflation. It is a quantitative measure of the ratio at which the average price level of a basket of goods and services in
an economy increases over a period of time (investopedia.com,2019).
Minority. The smaller number or part, especially a number or part representing less than half of the whole
(oxforddictionaries.com,2019).
Permissible. It is when something is allowed or permitted by laws or rules (Merriam Webster,2019).
Wages. It is the amount of money that workers are paid based on the numbers of hours, days, etc. That are worked
(Merriam Webster,2019).