Inflation rate is the rate of price change of commodities and services in a particular area in a defined period of time. Inflation rate is being used by economy analyst to gauge the performance of the government to combat the rising prices of food and basic commodities in the country.
Why Inflation Rate is Important?
To give you more information about inflation, I wrote an article regarding what is inflation all about. I strongly suggests to you to visit that post so you can get new information about inflation.
Inflation rate is also important in investing since you want to earn profit from your investments more than the inflation rate. It is nonsense to invest money in a particular investment vehicle that is giving lower interest than the current inflation rate.
If you invest your money on that kind of investment, you are losing money not making money from it. Why? Because your money loses its buying power because of inflation. It is the reason the P100 ten years ago is worth more at that time than this day or year.
So as an advice to you, if you will start to invest your money, you should put it in a investment which can give a higher interest or return than the current inflation rate in the Philippines. The typical investments that can give higher interest than the inflation rate are mutual funds, stocks, t-bills, some time deposits, bonds, UITF and ETF.
Current Inflation Rate in the Philippines
According to the National Statistics Office (NSO) of the Philippines, the current inflation rate now in the country can be seen in the table below.
Year-on-Year Inflation Rates, All Items
|June 2011||May 2011||Year-to-date|
NCR – National Capital Region
AONCR – Areas Outside National Capital Region
Inflation rate is an important factor in determining which investment vehicle you should invest in so you will not lose money from inflation.