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An undergraduate Thesis

Presented to the faculty of the

College of Business and Entrepreneural Technology

Rizal Technological University

In partial fulfillment of the

Requirements for the Degree of

Bachelor of Science in Business Administration

Major in Marketing Management


Belvar, Nycel D.

Carabanes, Eunice

Marquez, Angel Mae F.

Panelo, Noli D.

Taguinota Clarize Cate L.

2018 – 2019



Life isn’t hard to predict but it is how people associate in society, we

must decided and involve how to deal with the resulting conflicts including the

affected of inflation to the goods and services. Many people can affect of inflation

especially to the people might buy, but we cannot control the way of continuing

rise in the general price level of a available goods and services. High inflation

can also have unexpected effects, it can negatively affect currency in rising

prices in making goods on the uncompetitive market. Though many people

attribute the increase of the expensive prices in different factors, one thing is for

sure, our budget for groceries can no longer buy enough for our needs and it is

not good for the economy or individuals.

When prices rise for energy, food, commodities and other goods and

services. The entite economy is affected of inflation, impact the cost of living, the

cost of doing business, the borrowing money, mortgage corporate and

government bond yields, and every other faces of the economy affects small

business, which is inflation has big impact in our livings. When goods and

services rise many people affect especially when they buy or purchase. This can

lead to increased consumer spending across the economy, encouraging growth

and must be pointed out this effect should not be over stated because it leads to

higher demand, which result in price rises.

That’s why researchers come up with this study because they want to

know and to find out the effect of inflation in the selected mini groceries in Pasig

City. Through the respondents we can gathered data. This study is value from a

development perspective in as much as governments of developing economies

can employ. This can be useful tool for developing countries to enhance inflation



This study aims to find out the effects of inflation in the selected mini-

groceries in Pasig City that provides the profile of the respondents regarding to

the topic and questionnaires relating to the problem to be answered also by the


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

1.1 Gender

1.2 Age

1.3 Civil Status

1.4 Educational Attainment

1.5 Income

2) What are the effects of inflation in the selected mini-groceries in

Pasig City?
2.1 Low Sales

2.2 Limited Stocks

2.3 Retrenchment

3) What are the factors that can adversely affect the consumer

buying decisions?

3.1 Economic Status

3.2 Financial

3.3 Group Influence

3.4 Personal Preference

3.5 Advertisement

4) Does your consumer bought the usual products they purchase

after the noticeable changes in prices?

5) Does it affect your sales?

6) What are the strategies you apply during inflation?

6.1 Find new manufacturer who offer low prices

6.2 Price increase on selected item

6.3 Do nothing

6.4 Others, Please specify ______________.


This study is a carefully managed financial resource. Respondents,

consumer, evry one that deals in effect of inflation. The respondents is aware by

dealing with negatively effects of inflation in their mini–groceries especially the

consumer who might buy a good and services. Inflation also greatly affect to

consumers behavior because of rising of the cost. It will create an impact on

consumer since it will deal with demands for goods and services that will

increase faster than supply, costing prices to rise. The result also showed a

significant long and short relationship between the market returns and

exchanging rate. The prices of various identifiable consumer goods and services

as well as salaries, increased on average on accordance with the overall rate of

inflation over time. When this study was planned, the goal researchers was to

identify and why the price increased of a selection of consumer goods and

services. And buy this we can know why we are affect of being inflation and to

focus on the economy issues. And consumer will be aware of knowing it if the

products will got a higher price.


This study focuses in the effects of inflation on the selected mini-

groceries. The researchers will gathered the data in Pasig City area that focus in

what issues effect of inflation in our economy. First is the experience with

inflation in price increases from perspective happen in our various goods and
services. This is also include knowing its relevance of materials that satisfied the

needs of the users. The researcher will use one hundred percent of respondents

in gathering data for mini-groceries that the consumer will get some reliable

information in the research we are conducting. The researchers made

questionnaires as an instrument of getting the answer of our respondents.

Also this study will not elaborate the specific adversities of the

respondents according to profile but will just gather information about the

adversities in general for the credibility of the research.


Advertisement - a notice or announcement in a public medium promoting a

product, service, or event or publicizing a job vacancy.

Economy - the wealth and resources of a country or region, especially in terms

of the production and consumption of goods and services.

Exchange Rate - the value of one currency for the purpose of conversion to


Cost - (of an object or action) require the payment of (a specified sum of money)

before it can be acquired or done.

Income - money received, especially on a regular basis, for work or through


Inflation - a general increase in prices and fall in the purchasing value of money.

Manufacturer - a person or company that makes goods for sale.

Price - the amount of money expected, required, or given in payment for


Retrenchment - the reduction of costs or spending in response to economic


Stocks - a share which entitles the holder to a fixed dividend, whose payment

takes priority over that of common-stock dividends.



This chapters presents the significant areas of major components of the

study. Each section is organized under related literature, foreign and local

And international studies. Insistent to identify the effect of inflation on the

economic growth, there is seemed a need to conduct a research on the

subject for a wider view of some relevant circumstances. In view of above

consideration, studies are presented as they lead justification to the study.


Retail modernization in developing countries and its effect on the broader

food system has been a major focus of research since the early 2000s. The
most visible banner for this work has been the “supermarket revolution”.

Supermarkets existed in Latin America from at least the 1960s1, but began to

grow much more rapidly in that region during the economic boom and

opening to Foreign Direct Investment (FDI) of the 1990s. Growth began later

in East/Southeast Asia and Central Europe, followed by selected countries of

Africa (Reardon et al, 2004). This growth, together with new procurement

practices that the firms work to apply, has lead to a rash of studies attempting

to document and anticipate the impacts of these firms on existing actors in the

food system, and to draw policy implications for governments and donors


Inflation Rate An advantageous effect of inflation to stocks is

commonly believed. The reason is that the returns to shareholders are

increased due to inflation since product prices increase faster than interest

(Udoka et al., 2013). Hardin, Jiang and Wu (2012) stated that if investors are

unsuccessful in adjusting nominal growth rates with nominal discount rates,

stock prices will be undervalued (overvalued) when inflation is comparatively

high (low). The relation of inflation International Journal of Accounting

Research (IJAR) Vol. 2, No. 12, 2016 44 to stock price is still unclear which

makes studying the performance of these two variables vital for researchers

(Saleem et al., 2013). Inflation has been a concern of every ups and down of

the economy. Granville (2013), Bartolotti (2006), and Ciftcioglu and Begovic
(2007) had studies of the good effect of inflation on growth in the short-run. A

study showed that increasing money supply raised the output level of the

firms in a short period of time creating demand shocks. An unforeseen

inflation provided an increase in the growth rate while a decrease in inflation

rate resulted in a declined growth rate. However, this view is applicable only

in the short-run and does not consider its long-run effects. Modern

economists believe that inflation rate negatively affects economic growth. It is

because inflation brings out uncertainty as the study discussed due to lack of

approximation techniques and less understanding of its variability. Thus,

regulating inflation is a precondition for maximizing economic growth. Kumari

(2011) stated that today, because of the increasing growth and liberalization,

the center of studies has been moved toward developing countries. There are

two main channels in which inflation appears to affect stock prices. The first

channel is the impact of inflation on the potential earnings of the firms. The

other one is the way investors regulate their discount rate for future cash

flows. A less stability was found in the prices of stocks and a higher

investment uncertainty if there is an indication of inflation. The perception of

this study is a negative relationship between inflation and stock prices since

the latter are the reflection of future activity of the economy (Bhar, 2010).

Morris (2009) explained that one factor of a fall in stock prices in the period of

inflation is also a rise in interest rates as the Federal Reserve tightens the

supply of money to reign in borrowing. The higher earnings of the companies

may be perceived by the investors as a product of higher prices rather than

productivity gains. Thus, investors might not be willing to pay for the current

price of the stock or if they own stocks already, may decide in selling those.

As the expectation of the investors stumbles because of these conditions,

stock prices are expected to fall. Stock Price Growth. For years, a sustained

growth in Gross Domestic Product signifies a strong and efficient nation.

Later, a good stock market has been recognized as important for economic

growth through investors and entrepreneurs being offered with interest. It is

said that throughout the years, many researchers have been studying the

relation of inflation to stock prices with equivalent effect to its returns (Kumari,

2011). Saleem et al. (2013) mentioned that a decline in nominal interest rates

is caused by a decline in the expectations the consumers have in future

inflation. This may lead to an increase in stock prices because lower rates

mean a higher present value of how much money can be earned or lost in the

future by an entity or corporation during a given time. But a decline in the

expectations the consumers have in future inflation may also lower the

expected future corporate earnings which would probably lower stock prices.

Thus, the effect of the expectations the consumers have in future inflation on

stock prices may be uncertain or neutral. Ahmad et al. (2011) examined the

effect of inflation on stock prices of different countries through the collection of

stock price data from the Capital International Perspective for a period of 10

decades. Through the use of a regression model, the study reported a

negative relationship between stock prices and inflation. Strand (2008)

explained that when inflation rises, stocks portfolio will be greatly affected

especially when these stocks do not benefit from the said inflation. During

2007, Canadian Imperial Bank of Commerce, one of the largest banks in

Canada, experienced unanticipated crisis wherein prices ranges from $48.70

to $108.64. This fluctuation created a shock making investors sell off their

assets which caused a downward stock price adjustments among financial



The acceleration of price increases in a number of countries in the past

few years has evoked active discussion of imported inflation in open

economies. Several theoretical studies on the subject have appeared, but few

empirical studies have been made. In the case of particular countries, it is

often argued that the recent acceleration of inflation is due largely to external

rather than to domestic factors. However, in the absence of adequate

empirical work to support this contention, it remains open to question. The

purpose of this study was to extend and modify a monetary model of inflation

in an open economy, using the studies of Laidler (1972) and McCallum (1973)

as a starting point, and to test the model with Philippine data for 1951-73. The

estimated behavioral equations of the model generally describe movements

in the demand for real cash balances, output, prices, and imports. It was

found that the model traces the rates of inflation and the changes in the

money stock very well. It was less successful in explaining the changes in

output and imports, but this was expected, since it was not specifically

designed to explain such changes. Because of the inclusion of lagged

endogenous variables in the model, it was difficult to separate clearly the

effects of domestic and external factors on the price level. However, it does

appear that external factors played a small role in price increases occurring in

the Philippines in most of the years from 1951 to 1972. In contrast, the large

price increase in 1973 was attributable mainly to external factors, and in that

sense, the 1973 inflation was largely imported. Under long-run steady-state

conditions, credit expansion appears to play no part in influencing real output,

but it increases prices and imports considerably. However, these implications

of credit expansion for output, prices, and imports in the steady-state

condition should be interpreted cautiously, since the present study is not

based on a growth model. /// L'accélération de la hausse des prix dans un

certain nombre de pays ces dernières années a suscité des débats animés

sur l'inflation importée dans des économies ouvertes. Plusieurs études

théoriques sur la question ont été publiées mais rares sont les études

empiriques qui en ont été faites. Dans le cas de quelques pays, on prétend

souvent que l'accélération récente de l'inflation est due en grande partie à

des facteurs externes plutôt qu'internes. Toutefois, en l'absence d'un travail

empirique suffisant pour appuyer cette hypothèse, elle reste sujette à

controverse. L'objet de cette étude était d'élargir et de modifier un modèle

monétaire d'inflation dans une économie ouverte en prenant pour point de

départ les études de Laidler (1972) et de McCallum (1973) et d'expérimenter

le modèle avec les données disponibles sur les Philippines pour 1951-73. Les

équations du comportement estimé du modèle décrivent en général les

mouvements de la demande des soldes de trésorerie réels, de la production,

des prix et des importations. Il a été constaté que le modèle détermine très

bien les taux d'inflation et les modifications de la masse monétaire. Toutefois,

il n'a pas aussi bien expliqué les variations de production et d'importation

mais on s'y attendait car ce modèle n'avait pas été spécifiquement conçu

pour les expliquer. En raison de l'inclusion dans le modèle de variables

endogènes décalées, il était difficile de séparer clairement les effets des

facteurs internes de ceux des facteurs externes sur le niveau des prix.

Toutefois, il semble que les facteurs externes n'aient joué qu'un rôle limité

dans la hausse des prix survenue aux Philippines presque tous les ans entre

1951 et 1972. En revanche, la forte augmentation des prix de 1973 a été

essentiellement attribuée à des facteurs externes et, en ce sens, l'inflation de

1973 a été dans une large mesure importée. Dans des conditions constantes

à long terme, l'expansion du crédit semble ne pas influer sur la production

réelle mais elle fait monter les prix et accroît sensiblement les importations.

Toutefois, il y a lieu d'interpréter avec prudence ces effets de l'expansion du

crédit sur la production, les prix et les importations car la présente étude ne

s'appuie pas sur un modèle de croissance. /// La aceleración del alza de

precios que vienen experimentando en los últimos anos un cierto número de

países ha dado lugar a activos debates sobre la inflación importada en las

economías abiertas. Sobre este tema han aparecido varios estudios teóricos,

pero se han realizado pocos estudios empíricos. En el caso de países

particulares a menudo se sostiene que la reciente aceleración de la inflación

se debe en gran medida a factores externos más bien que internos. Sin

embargo, como no puede apoyarse en estudios empíricos adecuados, este

argumento resulta objetable. La finalidad del presente estudio ha sido de

ampliar y modificar un modelo monetario de inflación en una economía

abierta, utilizando los estudios de Laidler (1972) y de McCallum (1973) como

punto de partida, y de ensayarlo con datos sobre Filipinas relativos al período

1951-73. Las ecuaciones de comportamiento estimadas del modelo

describen generalmente las oscilaciones de la demanda de saldos de caja

reales, la producción, los precios y las importaciones. Se ha hallado que el

modelo determina muy bien las tasas de inflación y las variaciones de la

masa monetaria, pero su éxito es menor en cuanto a la explicación de las

variaciones de la producción y las importaciones, si bien esto se esperaba

porque no se había concebido específicamente para explicar tales

variaciones. Debido a la inclusión en el modelo de variables endógenas

desfasadas, ha sido difícil separar claramente los efectos de los factores

internos y externos sobre el nivel de precios. No obstante, parece que los

factores externos desempeñaron un papel pequeño en las subidas de precios

ocurridas en Filipinas durante casi todos los años del período de 1951 a

1972. En contraposición, la considerable alza de precios de 1973 se atribuyó

principalmente a factores externos y, en este sentido, la inflación de 1973 fue

en gran medida importada. En condiciones estables a largo plazo, la

expansión crediticia no parece ejercer influencia alguna sobre la producción

real, aunque hace subir los precios y aumentar las importaciones

considerablemente. Sin embargo, estas consecuencias que tiene la

expansión crediticia sobre la producción, los precios y las importaciones en

condiciones estables deberían interpretarse con cautela dado que este

estudio no está basado en un modelo de crecimiento.