Supply and demand components of Philippine inflation (2001–2024)
Published in Applied Economics Letters, 2025
Abstract
This paper decomposes Philippine inflation into supply and demand components, inspired by recently developed methods. Using Philippine household consumption data, I use a VAR model to distinguish supply-driven from demand-driven inflation from 2001 to 2024. Findings show the predominance of supply-driven components of inflation during key episodes, including the 2008, 2018, and 2022 inflation spikes. The results also suggest that the supply-driven component of inflation responds more to shocks like oil price shocks and even monetary policy shocks from abroad. The study highlights the role of supply-focused policies during times of high inflation, and the role of relatively simple inflation decompositions in monitoring inflation dynamics.Recommended citation: Punongbayan, J.C.B. (2025). "Supply and demand components of Philippine inflation (2001–2024)." Applied Economics Letters, 1-7.
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