When prices rise, where does the lost purchasing power go?
Philippine inflation of 6.19% in the year to 2026-07 applied to national government debt of ₱19,389.2 billion works out to roughly ₱1.2 trillion of eroded real burden. This note shows the arithmetic and its limits.
Prices rise every year, so cash buys less every year. The next question is where the lost purchasing power goes. This note computes the other side of the equation from Philippine official statistics, and is explicit about what the calculation does not cover.
Which two sides does a price increase act on?
Nominal principal does not move with prices. A ₱1 million deposit and a ₱1 million loan are both still ₱1 million after prices rise 6.19%, but their meaning changes at the same time: the deposit buys less, and the loan is lighter relative to income.
Lost purchasing power is therefore not destroyed. What changes is the relationship between holders of nominal assets and holders of nominal debt. Which side you are on depends on your cash and deposits minus your borrowing, not on either figure alone.
Philippine Statistics Authority; BIS · Bureau of the Treasury · NG debt
What the Philippine figures show
Philippine headline CPI, year-on-year change to 2026-07 (PSA; BIS, 2010=100)
What the Philippine figures show
- National Government debt
- Balance
- ₱19,389.2 billion
- Observation
- 2026-07-31
- Real burden reduction at 6.19%
- about ₱1,200.2 billion
- Household debt
- Balance
- not held
- Observation
- —
- Real burden reduction at 6.19%
- no verified series in our data
- M2
- Balance
- ₱19,865.0 billion
- Observation
- 2026-07
- Real burden reduction at 6.19%
- for scale only
Selected entries from the table below. Its dates, units, definitions and limitations still apply.
| Item | Balance | Observation | Real burden reduction at 6.19% |
|---|---|---|---|
| National Government debt | ₱19,389.2 billion | 2026-07-31 | about ₱1,200.2 billion |
| Household debt | not held | — | no verified series in our data |
| M2 | ₱19,865.0 billion | 2026-07 | for scale only |
Two things stand out. First, national government debt is equivalent to 97.6% of M2, so the nominal debt of one borrower is nearly the size of the whole money stock. Second, at 6.19% the Philippine inflation rate is the highest in this data set, which makes the erosion of nominal balances correspondingly larger than in markets running near 2%.
The household row is a genuine gap rather than a zero. Without a verified series we do not estimate it, so the total effect across all borrowers is larger than the figure above.
What the gap between M2 and CPI does and does not say
From 2016-07 to 2026-07, Philippine M2 multiplied 2.348 times while CPI multiplied 1.466 times — the widest gap among the markets on this site. That difference cannot be read as an amount that flowed into asset markets, and the two multiples cannot be subtracted into a single “true inflation” number. M2 measures the stock of a monetary aggregate; CPI measures the price of a defined consumption basket.
Limits of this calculation. The figure applies one year-on-year rate to a stock balance, and observation dates differ slightly. The M2 series is depository corporations M2 (M1 plus quasi-money), not M3, and recent observations are preliminary and revisable. Government debt is the Bureau of the Treasury's National Government total, which excludes local government units and government-owned corporations. No household series is available, so the amounts here cannot be added into a net transfer figure.
How to use this
Start from your own net position: cash and deposits minus borrowing. Then pick the basis that matches your question. For the cost of a consumption basket, CPI is the closer reference. For the share an amount represents of a monetary aggregate, use the M2 ratio. Different answers reflect different measurements, not an error in one of them.
This site does not forecast prices or recommend assets. What it can do is show the same amount on both bases for a period you choose.
Questions & answers
If my deposits lose purchasing power, who receives it?
There is no single recipient. A price increase lowers the real value of nominal assets and the real burden of nominal debt in the same proportion, so depositors and borrowers are affected in opposite directions. It is an accounting relationship, not income to any institution.
Does this mean the government benefits from inflation?
What can be said is that the national government is a nominal debtor, so the real burden of its debt falls as prices rise. Calling that a benefit would also require looking at interest payments, the revenue structure and the asset side, none of which this calculation covers.
Why is there no household debt figure here?
Because CapsWindow does not yet hold a verified Philippine household debt series. The debtor side of this note therefore covers national government debt only, and the total effect of a price increase is larger than the figure shown.