NextGen Day

High prices still plagued Filipino consumers at the local level, as the year-on-year inflation rate for food items (excluding beverages) sold in sari-sari stores (neighborhood stores) reached 15.62% in January, according to the latest research released by Packworks in collaboration with Fourthwall, a sociocultural research firm. The figures obtained from Packworks’ Sari IQ business intelligence tool show Sari-sari store’s inflation rate is 4.4% greater than the official food inflation rate of 11.2% reported by the Philippine Statistics Authority (PSA) in January 2023.

The inflation of ready-made food (16.9%) recorded the highest difference with the official statistics (9.2%), exceeding PSA’s data by 7.7%. This is followed by milk, dairy, and egg products, and cereals, with a difference of 5.3%. 

For the joint analysis, Fourth Wall and Packworks replicated the consumer price index (CPI) approach used by the Philippine Statistics Authority, applying it to the products available in Sari IQ’s data. Moreover, the products included per category are only available in sari-sari stores. 

According to the study, the higher sari-sari store level inflation rate could indicate the increasing pressure among sari-sari store owners to increase their mark-ups and profit margins. These pressures come from continuing supply-side challenges, such as the shortage of eggs due to bird flu (thus, explaining the high discrepancy between dairy and egg products).

“It is important for Filipino consumers to be aware of these discrepancies because the products (ready-to-eat food, egg) whose inflation rate at the sari-sari store exceeds that of PSA are also the ones that the lower class typically consume due to their association with convenience and cheap price.  In a socio-cultural context, we tend to measure how well off or worse off we are through inflation – that is, inflation is the primary metric of poverty and economic performance, which becomes even more relevant if what is being discussed is food. This reminds us of the usual lamentation of older Filipinos, “noong araw, mura pa ang galunggong…” which means we are economically worse off now,” John Brylle L. Bae, Research Director of Fourth Wall, explained.

For Andres Montiel, head of data at Packworks, “Official statistics are limited in capturing grassroots patterns, which makes it crucial to cross-check them with data at the sari-sari store level to obtain a more precise understanding of micro-level dynamics. At Packworks, we provide retailers with reliable data that can be utilized to enhance customer engagement. Sari IQ is instrumental in uncovering what is happening at the ground level.”

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Methodology

The Fourth Wall Research Department utilized the same methodology for calculating the consumer price index as the Philippine Statistics Authority but applied it specifically to the products featured in Sari IQ’s data. The calculation was based on 2020 prices, and only products that are available in sari-sari stores were included for each category.

About Packworks

Packworks is a startup company that provides a business-to-business (B2B) platform that is easy to use, has low bandwidth, and light footprint that will allow sari-sari store owners to become more efficient in managing their business. Founded in 2018 and started as a solution for multinational companies in the Philippines to connect with neighborhood stores, the platform has now transformed into a way out of poverty for the millions of sari-sari store owners across the Philippines. Packworks empowers the sari-sari stores through scalable and accessible technology, with its team composed of dedicated developers, programmers, and technicians that work to put the power back into the hands of the people at the heart of Filipino communities by providing them with digital opportunities previously only available to big companies. By bringing technology-based solutions to one million Filipino sari-sari stores, Packworks is driving toward a more progressive, connected, and inclusive Philippines.

About Fourth Wall

Fourth Wall is the pioneer sociocultural research company in the Philippines that offers choice architecture consulting. Believing in the power of information to transform behavior, it synergizes economics and data analytics with behavioral science to extract key sociocultural insights for developing organizational and market strategies. Founded in 2018, Fourth Wall has served a diverse clientele, ranging from small and medium enterprises (SMEs), and large corporations to international development institutions. Its research offerings include People Analytics, Market Research, Organizational Research, and Partner Support, all facilitated by leaders in their respective industries, to understand your organization better and help you make optimal choices. For more information, visit: https://www.linkedin.com/company/fourth-wall-global/ 

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Disclaimer

This article is for informational purposes only and does not constitute endorsement of any specific technologies or methodologies and financial advice or endorsement of any specific products or services.

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