Explanatory Notes on the 2003 Poverty Estimates

D. Analysis of trends in poverty incidence versus average per capita income (at constant prices using implicit price index as deflator) by region

• Using 2000 as base year, an implicit deflator was computed by assuming "real" poverty threshold to be the same in 2000 and 2003. This implicit deflator was then used to convert the 2003 per capita income into real terms (that is, at 2000 prices). The resulting real per capita incomes using the implicit price index as deflator are shown on Appendix Table A .

• Consistent patterns are achieved, that is, changes in poverty incidence are explained by the trends observed in the real per capita income of the appropriate lower income group, except in Region X. Also, the use of the implicit price index resulted in higher real per capita incomes for 2003, thus, reversing the trends observed for most regions (either in the overall real per capita income or in the real per capita income by decile) from 2000 to 2003 using the CPI as deflator.

• At the national level, poverty incidence was reduced due to the positive growth in the real per capita income of the third lowest income group. This means that the increase in the prices of basic necessities was matched by an even higher rate of increase in the real per capita income of some families in the said income group, thus, improving their command over basic necessities.

• For Regions I, II, III, IV-A, V, VI, VII, VIII, XII, CAR and ARMM, the decline in poverty incidence could be explained by the rise in the average real per capita income of the lower income groups in these regions, particularly those whose per capita incomes are closest to the poverty thresholds. It was in these income groups that some families were able to increase their per capita income sufficiently to match the rising cost of basic necessities.

• While overall real per capita income decreased in NCR, poverty incidence dropped nonetheless since the average real per capita income of the lowest income group went up. Thus, some families in this income group managed to cope better with the increasing cost of basic necessities.

• Poverty incidence in Regions IX, XI and CARAGA increased despite the expansion in the overall real per capita income. An examination of the distribution by income group revealed that this could be explained by the decline in the real per capita income of the lower income groups in these regions.

• Poverty incidence in Region IV-B worsened as a result of the negative growth in the real per capita income of families in the fourth lowest income group. Real per capita income of families in this income group declined on the average, indicating that the cost of basic necessities rose faster than their per capita income.

• Poverty incidence in Region X increased, although only by a very negligible rate, that is, 0.02, with the decline in the overall real per capita income by 2.4 percent. A look though at the income distribution by decile revealed that the real per capita income of the fourth lowest income group, where families whose per capita incomes are closest to the poverty threshold are found, even rose slightly by 1.1 percent and did not decrease as would have been expected with the increase in poverty incidence.

For these notes, inquiries may be made with Ms. Redencion M. Ignacio or
Ms. Glenita V. Amoranto at telefax number (632) 896-7981 or at their
e-mail addresses rm.ignacio@nscb.gov.ph / gv.amoranto@nscb.gov.ph.