Philippine Christian University
Senior High School
Rising Prices, Tighter Budgets: The Effects of Inflation on Accounting
and Business Management Students' Expenses
A Research Proposal
Presented to the
Faculty of Senior High School
Philippine Christian University – Manila
In Partial Fulfillment
of the Requirements in RDL 1:
Research in Daily Life 1
Name of Students
Antipala, Ashley
Cordovez, Denzel
Ecarnacion, Thomas
Lobo, Loreal Rein
Manuel, Ashley
Ricafrente, Czarina Miel
Roa, Christian Kurt
Tambis, Jillian Mae
Villegas, Jherald
Voluntad, Jhon Alfred
March 2023
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CHAPTER I
THE PROBLEM AND ITS BACKGROUND
Inflation is very important to know, and this chapter will enlighten us on the
meaning of inflation and why it is essential to learn. Inflation is an extremely
experienced issue worldwide, and this chapter will give us an overview of
inflation. For instance, students will know why inflation is happening and how
this relates to their daily lives. Not just for students, but it is also relatable to
different sectors such as parents and professionals. Because all human beings
consume and need to be sustained daily for their entire lives.
Background of the Study
Inflation is one of the main factors driving price increases in the education
sector. A global concern, inflation has captured the interest of all areas of
society. Price increases are a sign of inflation. There are limits to how much
money can buy. Money loses value with time; for instance, a given sum can
now buy fewer items than it could when its value was higher.
Inflation raises the costs of education through increases in tuition,
textbook and supplies for school, etc. Making it harder for students to
sustain their daily needs, living expenses. The students' enthusiasm are
lower as a result of rising prices, and they are constantly concerned with
finding money to pay for necessities such as rent, power, and water. In
general, inflation can significantly affect students' capacity to pay for
higher education and take care of their fundamental requirements while
participating in classes. Students should be aware of these possible
consequences and create plans to reduce their financial burden.
In Washington DC, deep state cuts in funding for higher education over
the last decade have contributed to rapid, significant tuition increases and
pushed more of the costs of college to students, making it harder for them
to enroll and graduate. These cuts also worsened racial and class inequality,
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since rising tuition deters low-income students and students of color from
college (Mitchell et al., 2019). Education, like other public services, has
experienced and continues to experience the simultaneous pressures of an
inflation rate that weakens the purchasing power of resources, a leveling of
the economy that decreases the potential for major increases in revenues,
and a demand to improve quality (Halstead, 1983). Everyone in America
knows that college prices have been going up at an alarming rate for nearly
three decades, tuition inflation has been the subject of continuing family
concerns, student anxiety, gubernatorial proclamations, and congressional
investigations. In spite of this, there is no end in sight (Mumper &
Freeman, 2005).
In the Philippines, with the continuous rise of inflation in the country, the
poorest of the poor in the country might be the ones who will be directly
and most affected by the rise of prices of basic commodities such as but not
limited to food and water, housing, healthcare, education, gas, utilities,
transportation, and other daily expenses. This means that consumers will be
paying more for the same goods and services they previously afforded at a
lower cost. Often, the rise in income does not keep pace with inflation,
consequently becoming a budget problem as it minimizes our power to
purchase. When it comes to budgeting, if the daily budget is limited, it is
crucial to create a strategy. They should cut costs on the things that they
can live without. If it is inevitable to spend on goods, be mindful of the
budget and stick to it.
Inflation rate occurs when there is a sustained increase in the general
price level. Traditionally, high inflation rates are considered to be damaging
to an economy. High inflation rates create uncertainty and can wipe away
the value of savings. These are the factors that may affect Grade 11
Accountancy, Business and Management students of Philippine Christian
University- Manila Campus most notably inflation increase cost of
education as school colleges fees, tuition fees, study materials, books
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uniforms, medical test etc. so that poor students may not be able to
continue his/her studies. House rents, hotel fees will have higher rent and it
will greatly affect students who rent boarding houses. inflation may highly
destruct the mind of the students because instead of thinking about their
studies they are busy thinking about money and how they will manage it to
sustain their daily needs.
Education is really essential for every human being, and people treat it as
a stepping stone towards success. And it must not be limited to the students
and youth who want to reach their dreams so that they can help our society.
Inflation has a great impact on every member of society, and there is a
solution that needs to be raised. At this present time, there is a change that
needs to be made to face inflation. Inflation can be solved even for students
and young people who are part of society.
This research can be a way for the identification of the main expenses of
students and how they can lessen the effects of inflation. Each student has
different expenses and different management of allowance that needs to be
identified through interviews. As for the research, this is beneficial for us
consumers on how we can manage our finances. This will help our
economy to have a balanced flow in each sector of the economy especially
when it comes to the consumers. Students as a consumer can be guided to
the things that they need to do in managing their allowance well.
Statement of the Problem
The objective of this research is to examine the effects of inflation on the
expenses of Senior High School Students in their daily lives. This is a
narrative analysis because the questions are given in the form of interviews
with the respondents. This study specifically aims to answer the following
questions:
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1. How much is your allowance?
2. What are your top 3 expenses as a student?
a. School
b. Home
c. Personal
3. Having personal savings?
a. Bank account
b. Money box
Significance of the Study
The aim of our study is to help other people to be wise in handling their
money when there is an increase in the price of goods. According to the
research, the study's findings will be very helpful to the following:
Students. This will help them to be wise in handling their money, they will
know that the money should be used only when necessary. Their needs
should be prioritized over their wants because commodity prices are not
decreasing but increasing.
Parents. This study will help them to budget precisely from their wages, to
buy the basic needs first and not spend on useless things. It will also help
them to always list their daily purchases, save if necessary, and not buy
things they don't need.
Teachers. This research will also help them reduce the number of
purchases required for students in projects, as not everyone can afford it. It
will also assist them in teaching students how to budget money
independently of their parents.
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Scope and Delimitations
The scope of this study is to examine the effects of inflation on senior
high school students' allowance management. The study will focus on
student from PCU-manila senior high school students in a specific
geographic location. The research will investigate the challenges faced by
students in managing their allowance in the face of rising prices due to
inflation, and explore the coping mechanisms they use to deal with this
issue.
The study will focus only on Grade 11 Accountancy business
management of PCU-manila senior high school students and will not
include students from other educational levels. The research will be
conducted in a specific geographic location and may not be generalizable to
other locations or regions. The study will rely on self-reported data from
students and will not include data from other sources such as parents or
school administrators. The research will focus only on the effects of
inflation on allowance management and will not explore other factors that
may impact students' finances or spending habits. The study will be
conducted within a limited timeframe and may not capture long-term
effects of inflation on students' allowance management.
Definition of Terminologies
Inflation
A continuing rise in the general price level is usually attributed to an
increase in the volume of money and credit relative to available goods and
services.
-It's where the prices of products are rising.
Wise
To become informed or knowledgeable.
-To know how to manage one's money better.
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Goods
things for sale, or the things that you own.
-It's the items students or individuals purchase from stores.
Wants
A want is something that can improve your quality of life.
-It's something a person desires because of appreciation but it is not
necessary to survive.
Commodity
a substance or product that can be traded, bought, or sold.
-The products whose prices are rising.
Budget
A budget is a spending plan based on income and expenses.
-It is a method of managing expenses and income.
Allowance
A sum granted as a reimbursement or bounty or for expenses.
-A weekly or monthly given money to students for the expenses that
needed to be sustained.
Rate
A quantity, amount, or degree of something measured per unit of
something else.
-The rate of increase in prices over a given period of time. Inflation is
typically a broad measure, such as the overall increase in prices or the
increase in the cost of living in a country.
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Consumer
One that utilizes economic goods, or consumes it.
-The Senior High School Students who maximize goods and services.
Economy
The structure or conditions of economic life in a country, area, or period.
-The flow of goods and services in the country of the Philippines, it talks
about the natural resources in the country.
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CHAPTER II
REVIEW OF RELATED LITERATURE AND STUDIES
There are many past research that relates to this study due to the fact that
inflation is a current issue that the society is facing. This chapter will show
the relationship of inflation in this current time. Also methods and theories
can be found in this chapter that can be used so that inflation can be
furtherly understood.
Why is inflation experienced worldwide? Amidst growing and advancing
our production and manpower. Inflation is a growing problem in every
country and it has been affecting many people. The annual inflation rate in
the Philippines stood at 8.6% in February 2023, close to a 14-year high of
8.7% in the previous month and slightly below market expectations of
8.8%(Philippines Inflation Rate, 2023). Why is it still happening?
Definition of Inflation
Price increases, or inflation, can be thought of as the gradual loss of
purchasing power. The average price increase of a selection of products and
services over time can serve as a proxy for the rate at which buying power
declines(Fernando, 2023). A unit of currency effectively buys less as a result
of the increase in pricing, which is sometimes stated as a percentage.
Deflation, which happens when prices fall and buying power rises, can be
compared to inflation.
Because the Federal Reserve is actively trying to reduce the amount of
money in circulation, very few experts think the U.S. is headed for
hyperinflation(Movement, 2022). The rapid, unmanageable, and
unsustainable price increases that characterize an economy are referred to
as hyperinflation. While inflation measures how quickly prices for goods
and services are rising, hyperinflation is an extraordinarily high inflation
rate that typically exceeds 50% monthly. Hyperinflation can cause inflation
in other countries while benefiting once own country like U.S.
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The most well-known indicator of inflation is the Consumer Price Index
(CPI), which measures the percentage change in the price of a basket of
goods and services consumed by households. In Australia, the CPI is
calculated by the Australian Bureau of Statistics (ABS) and published once
a quarter. To calculate the CPI, the ABS collects prices for thousands of
items, which are grouped into 87 categories (or expenditure classes) and 11
groups. Every quarter, the ABS calculates the price changes of each item
from the previous quarter and aggregates them to work out the inflation
rate for the entire CPI basket( Australia, 2023). Inflation is measured by
CPI which can help the economy to manage it and prevent the rise of prices
in the consumer’s basket of goods and services. CPI is calculated monthly
or quarterly to monitor the prices of each goods and services.
The cause of Inflation
For the producer like farmers, the influence of production cost affects
their performance to produce products so that they can sustain the needs of
consumers at an affordable price. Government policy has an influence on
farmers’ rice production, and such policy can qualitatively affect the
farmers’ production in that the government provides production technology
and knowledge for farmers so that they can improve their productivity in
the long run(Laiprakobsup, 2019). Production cost from raw materials and
equipment contributes to inflation. Due to the fact that local farmers can’t
afford technology because of its a high price, some farmers choose to work
traditionally so that they can produce goods for consumers.
An increase in the demand for consumption goods during the pandemic,
but industrial production did not adjust quickly enough to meet the sharp
increase in demand. This imbalance between supply and demand across
countries contributed to high inflation(De Soyres, Santacreu, Young, et al.,
2023) Supply and demand is an element in the economy that affects the
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goods and production cost. These elements need to be met so that they can
be balanced.
Unconventional fiscal policy uses announcements of future increases in
consumption taxes to generate inflation expectations and accelerate
consumption expenditure(D’Acunto, Hoang, Weber, 2016). It is budget-
neutral and time consistent. The fiscal policy helps lessen or worsen the
effects of inflation. The fiscal policy can be controlled by the government
in case of emergency and help lessen the case of inflation.
The Effects of Inflation
While it might appear that business owners are benefited by the rising cost
of goods, they are significantly affected by inflation. In other words,
inflation measures the increase in prices for goods and services over time.
As prices rise, the purchasing power of consumers and businesses goes
down—which means they get less than what they used to for the same
amount of money(Oliveros, 2022). For instance, during inflation, overhead
costs like raw materials, utilities, and wages tend to rise. Periods of rising
costs can mean prioritizing higher-margin goods and reducing production
of low-profit products to help hold the bottom line (Lynch, 2022).
On the other hand, employers are also greatly affected by the price rising.
To cover their everyday expenses, employees will require a bigger wage.
They want a pay increase, increasing the company expenses. Consumers
will be forced to pay these costs in the form of higher prices, which fuel
inflation. For instance, in the Philippines, as the prices of commodities
continue to increase throughout the past year and income has been on the
decline, more Filipinos have had to increase their borrowings just to be able
to keep up. And this doesn’t look like it will change any time
soon(Katigbak, 2022). Also, in May, Canada’s inflation rate was 7.7 per
cent, compared to 3.6 per cent a year ago. The cost of pretty much
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everything is rising, making employees’ compensation less and less
valuable(Dujay, 2022).
High inflation raises the costs of students’ necessities, such as housing,
food, and transportation, and will push up tuition costs, making it more
important for students to spend less and earn more where possible(Bushra,
2022). For students, these increasing prices have been especially crippling.
Not only do students have to compensate for the higher cost of living but
being able to afford tuition as well. To illustrate, GHC student Michael
Clayton Vick has experienced the effects of inflation firsthand as he has
found himself paying more for groceries and gas. “It costs more than I
would normally pay for both,” Vick said(Henderson, 2022).
Considering all of this, inflation is a contemporary issue that needs to be
solved. The government, producers, and most consumers are affected by
this trend. Daily needs need to be sustained, and inflation is one of the
hindrances that cause production problems and higher prices that the
consumer can’t afford. The government, particularly fiscal policy, has a
role to play in this, as do consumers and producers. Even students are
facing this, especially as they consume food and many other necessities,
pay some rent, and commute, which affects their finances. But sadly, if this
inflation continues, many will have a hard time affording their needs.
Theoretical Framework
STUDENT BUDGETING AND SPENDING
BEHAVIOUR
Study found that students choose to buy the product which will meet their
interest relative to product and price(Bona, 2018). The study concluded that
college students’ spending behavior is massively influenced by their family
background. Parents also play a critical role in shaping not only the attitudes
towards financial management but also life attitudes in general of their
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children. To improve financial habits, students must take some time to create
concrete measures to help them keep track of their expenses. First, they
should create their own budget and keep ways on how to improve it. Keeping
a record of expenses will help them monitor how much money they spend
on clothing, entertainment, and gadgets. They should not forget to allocate
money for savings because a good budget does have savings. Lastly, they
should keep a positive attitude. This study failed to quantify student spending
behavior in terms of monetary terms, since it was more qualitative in nature.
INFLATION
According to Mankiw(2009), Inflation is an increase in the overall general
price level of goods and services in the economy over a period of time, which
constantly makes the purchasing power of the domestic currency is falling.
However, inflation is not an easy thing to explained and control because this
instrument of policy is potentially so powerful that can impact the economic
conditions such as the society will face a short-run tradeoff between inflation
and unemployment. Based on Law No. 3 of 2004, concerned in the
effectiveness of monetary policy to achieve and maintain the stable value of
rupiah rate, which the stability is shown through inflation rate and the
exchange rate, the central bank of Indonesia called Bank Indonesia
implemented an inflation targeting framework in order to keep the economy
running smoothly.
THE MEAN REVERTING BEHAVIOR OF INFLATION IN THE
PHILIPPINES
Central Bank authorities should carefully manage inflation rate
uncertainties to achieve economic growth and development not only in the
short-run but also in the long-run. Since inflation is a key macroeconomic
variable, an increased understanding about its behavior is undoubtedly
important. Thus, paper employs unit root with breakpoints to examine the
mean reverting behavior of inflation rate in the Philippines using monthly
data from 2002 to 2020. Empirically, the unit root breakpoint innovational
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and additive outlier tests favor the stationarity or mean reverting behavior of
inflation in the Philippines. Also, results of standard unit root tests, ADF, PP,
GLS-Dickey-Fuller, KPSS and NP, provide strong evidence of mean
reverting processes. The mean reverting behavior of inflation rate reveals
that the monetary policy using inflation targeting framework has succeeded
in reducing chronic inflation persistence in the Philippines(Camba & Camba,
2021). Thus, this research supports inflation targeting policy that aims to
maintain general price level stability for the Philippine economy's long-term
growth and development prospects. The findings of this research remain
important for the central bankers for not only providing them better
understanding about the behavior of inflation rate, but also helping them
formulate and implement policy reforms related to money, credit and
banking.
Conceptual Framework
INPUT
Profile of the
Respondents
• Sex
• Age
• Section
PROCESS
Possible Questions
• 1. How much We will conduct a semi-
OUTPUT
structured interview, Recommendations for
is your Questionnaire and senior high school
Google forms, our students to manage
allowance? research methodology their allowance
• 2. What are will be narrative.
amidst inflation
• Survey
your top 3 questionary
• Analysis Data
expenses as a through
student?
• 3. Having
personal
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The Conceptual Framework of this study it’s composed of three parts: The
input , which focuses on determining the profile of the student respondents
in terms of Age, Sex, and Section. The process represents how the data will
be collected as well as the tools that will be used to analyze data. The
output of the study is a set of recommendations for senior high school
students to manage their allowance amidst inflation.
CHAPTER III
METHODOLOGY
Research methodology: here, the researchers will introduce the methods for
how the collection of data will be executed. An analysis will be done here,
especially for a credible source of data. The researchers will also set specific
participants and a locale. This will also be dependent specifically on a
scientific study.
Research Design
The researchers will use a narrative research design. They can collect data
through interviews, focus groups, or written stories from participants, which
can provide valuable insights into their experiences with rising prices and
tighter budgets. This design also enables the exploration of the underlying
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reasons, emotions, and beliefs that participants associate with their
experiences.
Research Locale
The research will be conducted at the Philippines Christian University-
Manila Senior High School, at Taft Pedro Gil. It will be a weekday, and the
researcher will set a time in a specific room to interact with the participants
regarding the effects of inflation. It will be a 10- to 30-minute interview
based on the break time of the partcipants.
Research Participants
The participants that will be involved in this research will be the 2-3
students until saturation, that will be answering the questions. They are from
the 11th grade ABM at Philippine Christian University-Manila; they are the
chosen participants because gathering information will be easier for the
researchers because all participants are inside the school only.
Research Instrument
The semi-structured interview and questionnaires will be used to gather
answers that will help in our research. In questionnaires, the only types that
will be used here are Yes or No and Subjective questions. The questions that
will be asked are only about the research being done and will not ask any
personal questions. Only the researchers will know the answer of the
participants, and it will not know by others. Only five to eight questions will
be asked for students in Philippine Christian University Senior High School
Manila.
Data Gathering Procedure
Before beginning the study, the researchers would request permission from
Philippine Christian University administration. The questions will be created
in advance by the researcher. The researcher will set a room for Grade 11
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ABM students. To maintain the accuracy and objectivity of the entire
interview, the researcher will make sure that the personal data and identities
of the participants will remain private and secure. This was required by the
Data Privacy Act, Republic Act No. 10173. The data will be gathered by the
researchers through semi-structured interviews, and it contains information
about each student's profile, including name, sex, age, and section. The
questions pertaining to the problem will be in the second part of the interview,
which also includes questions pertaining to the current study. The gathered
data will be validated, tabulated, interpreted, or analyzed after the
participants have completed it.
Data Analysis
The researchers will use a thematic analysis in which they will use the six
steps of this analysis. Familiarization, coding, generating themes, defining
and naming themes, and writing up the whole analysis would be the next
steps in this research. The data will be from our interviews at the Philippines
Christian University-Manila with ABM students in grade 11.
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