THE RELATIONSHIP BETWEEN INFLATION RATES AND MICRO-

ENTREPRENEURS’ INCOME STABILITY

A Research Paper
Presented to The Faculty of Senior High School Department
Philippine Nikkei Jin Kai School of Calinan Inc.
Durian Village, Calinan, Davao City

____________________

In Partial Fulfillment of the Requirements for the Subject

Practical Research 2

____________________

TRISHA NICOLE B. SENARILLOS

JERSEY RHYNE O. INSULAR
AEROSMITH R. PELIGOR
ATHEA CIELO S. LABOG
HIKARU M. KAYAMA
November 2024
TABLE OF CONTENTS
 CHAPTER 1
INTRODUCTION

Background of the Study

In the dynamic landscape of global economies, the interplay between inflation

rates and micro-entrepreneurs’ income stability serves as a critical focal point. For micro-

entrepreneurs, whose livelihoods are intricately woven into the fabric of economic

fluctuations, understanding how inflation impacts their income stability is not merely

academic but profoundly practical. As inflation ebbs and flows, it acts as both a catalyst

and a constraint, influencing everything from the supply side, demand side, pricing

strategies, and financing the business.

In Central Europe, sharp and uneven price growth can have a substantial impact

on the structure of the business sector and the overall economy. Prices for some

commodities, particularly energy inputs, are extremely variable. This hampers financial

management and company planning. As prices rise, a broader range of goods and services

are affected, raising the danger of secondary inflation. Such an environment puts pressure

on enterprises to implement extreme price policy changes, which passes the burden to

other customers. In this situation, customers are more willing to tolerate rises in

production prices than in the prior period, when prices had been relatively stable for a

long time. This raises inflationary pressures (Belanová, 2023).

Small enterprises in the Philippines are significantly impacted by inflation. The

general operation and existence of enterprises are impacted by rising costs and uneven

changes in input and output prices; certain businesses suffer negative effects, and the

structure of the business sector is disrupted. This result implies that the effects of inflation
on businesses might vary, with some able to pass along growing costs to customers while

others find it difficult to control the consequences of inflation (Bautista, 2023).

In Davao City, high inflation can affect a lot of aspects of the businesses, if

materials are expensive, so is the transport cost of our local producers to sell their

products outside Davao. To point out, that in high inflation, raw materials are increasing

in price, hence, it will also increase the prices of goods and services, which can generate

less income for the micro-businesses (Tria, 2023).

Recent economic shifts have made the relationship between inflation and income

stability more pronounced, with rising prices leading to higher input costs, while

consumer spending power may simultaneously decline. Understanding this dynamic is

essential for designing policies and interventions that can help stabilize incomes and

foster resilience among micro-entrepreneurs.

Statement of the Problems

Inflation increases the cost of goods and services, reducing the purchasing power

of consumers. This negatively impacts the income stability of micro-entrepreneurs, who

often lack the resources to absorb rising costs or adjust pricing to maintain profitability.

The relationship between inflation rates and micro-entrepreneurs’ income stability is

critical, as persistent inflation can lead to reduced sales, higher operational costs, and

financial instability for small businesses. This study was conducted to understand how

inflation affects micro-entrepreneurs as it is essential in developing strategies that can

mitigate these risks and promote sustainable income stability of existing businesses.

This study will answer the following questions:

1. How do variations in inflation rates correlate with fluctuations in the

income stability of micro-entrepreneurs?

 2. What is the impact of inflation-induced increases in input costs on the

income stability of micro-entrepreneurs?

3. How do micro-entrepreneurs’ income stability metrics (e.g., average

monthly income, income variability) change in response to different

inflationary environments?

4. How do inflation rates affect micro-entrepreneurs’ financial resilience and

long-term income stability?

5. What role do pricing adjustments and cost management strategies play in

mitigating the effects of inflation on micro-entrepreneurs’ income

stability?

6. Does higher inflation rates affect the micro-entrepreneurs’ income

stability?

Research Objectives

This study aims to meet the following objectives:

1. Publish a new study regarding inflation locally.

2. To examine the impact of inflation on the purchasing power of micro-

entrepreneurs’ customers and its effect on their sales revenue.

3. To assess the coping mechanisms used by micro-entrepreneurs to manage income

stability during periods of high inflation.

4. To identify the sectors or types of micro-enterprises most vulnerable to income

fluctuations due to inflationary pressures.

Research Hypotheses

H1 – There is a significant relationship between inflation rates and micro-

entrepreneurs’ income stability.

 H0 – There is no significant relationship between inflation rates and micro-

entrepreneurs’ income stability.

Scope and Delimitation of the Study

This study investigates the relationship between inflation rates and the income

stability of micro-entrepreneurs. The focus is on micro-entrepreneurs operating in small-

scale businesses, particularly those in semi-urban areas, as these businesses are typically

more exposed to the effects of inflation.

The research will utilize quantitative data. Quantitative data will include inflation

rates and income data collected through surveys and financial reports. The study will also

analyze how different sectors (e.g., retail, food services, and local manufacturing) are

affected by inflation.

According to The Department of Trade and Industry, MSMEs (Micro, Small, and

Medium Enterprises) are categorized based on their asset size and number of employees.

Enterprises are classified as micro if they have PHP 3,000,000 or less in assets and one to

nine employees (serp-p.pids.gov.ph, 2023). Therefore, this study is limited to micro-

entrepreneurs whose businesses employ fewer than 10 people and own a PHP 3,000,000

or less in assets. It will exclude larger businesses, which may have more sophisticated

financial strategies to mitigate inflation impacts.

The research will focus on inflation as the primary economic variable, excluding

other factors such as interest rates, exchange rates, or government subsidies that might

also influence income stability. It will not analyze inflation’s impact on consumer

behavior in detail but rather focus on its direct effect on micro-entrepreneurs’ income.
The study will also be geographically limited to one place, particularly in Poblacion

Calinan, rather than attempting to draw conclusions on a national or global scale.

Significance of the Study

This study is significant to various stakeholders, namely, micro-entrepreneurs,

policymakers/economic planners, financial institutions, and future researchers.

First, the Micro-entrepreneurs. Understanding how inflation affects their income

provides valuable insights into financial planning, pricing strategies, and long-term

business sustainability. By examining this relationship, entrepreneurs can develop

adaptive strategies to maintain income stability despite fluctuations in the economy.

Second, for Policy-Makers/Economic Planners. This study can offer data-driven

insights into how inflation impacts small business owners, a critical sector for local

economies. It can serve as a basis for developing inflation-mitigation policies, such as

offering financial support or crafting policies that protect micro-entrepreneurs from

inflationary shocks.

Third, for Financial Institutions. By gaining a clearer understanding of the risks

faced by micro-enterprises in inflationary environments. It will help institutions to design

financial products and services, such as flexible loan programs, that are better suited to

the needs of micro-entrepreneurs, particularly during periods of high inflation.

Lastly, for the Future Researchers. This research contributes to the broader field

of economic studies, offering empirical evidence of the micro-level impact of

macroeconomic variables like inflation. It can serve as a foundation for future research

exploring the resilience of small businesses to inflationary pressures and the role of

monetary policies in supporting income stability.

 Overall, this study has the potential to influence the micro-entrepreneurs,

policymakers/economic planners, financial institutions, and future researchers. Making it

a critical contribution to understanding the dynamics between inflation and income

stability in the micro-entrepreneurial sector.

Definition of Terms

Inflation – rate of increase in prices over a given period of time.

Income Stability – consistency and reliability of an individual or a business to generate

income over time.

Micro-entrepreneur – an individual who starts and operates a small business venture,

typically with limited resources, capital, and staffing.

 CHAPTER 2
REVIEW OF THE LITERATURE

This chapter presents the related literature and studies after the thorough search
done by the researchers. This also presents the theoretical and conceptual frameworks to
fully understand the research to be done.

Review of Related Literature

This section reviews related literature and related studies supporting the current
study.
Theoretical Framework

The following theories served as the fundamental basis of this study.

Conceptual Framework

The diagram illustrates the conceptual framework of the study. This serves as the
study's guiding principle.
 CHAPTER 3
METHODOLOGY

This chapter covers the research design, locale, respondents, sampling techniques,
data-gathering procedures, statistical treatment, data analysis, and ethical considerations.

Research Design

In this study, a correlational research design is employed to explore the

relationship between inflation rates and micro-entrepreneurs’ income stability. This

design allows for the examination of how changes in inflation rates are associated with

fluctuations in income among micro-entrepreneurs.

The correlational research design is suitable for this study because it focuses on

identifying and quantifying the strength and direction of the relationship between two

naturally occurring variables—inflation rates and income stability. Since the aim is not to

manipulate variables or determine causality but rather to observe patterns and

associations over time, this design allows for a practical and efficient analysis of real-

world data. It also enables researchers to explore complex interactions between economic

conditions and income without the need for experimental controls.

Research Locale

Poblacion Calinan was chosen as the research locale for this study due to its

unique blend of economic activity and the presence of a thriving community of micro-

entrepreneurs. As one of the key commercial hubs within the Calinan district, it is home

to a diverse range of small businesses, including street vendors, sari-sari store owners,

and small-scale manufacturers. These micro-entrepreneurs are particularly sensitive to

economic shifts such as inflation, making Poblacion Calinan an ideal setting to study the

relationship between inflation rates and income stability.

Moreover, the area has experienced fluctuating economic conditions in recent

years, offering a rich data set for understanding how inflation impacts small businesses.

The accessibility of the area for data collection. Its demographic diversity also allows for

a broader representation of micro-entrepreneurs, enhancing the generalizability of the

findings.

Research Respondents

The respondents of this study consist of micro-entrepreneurs operating in

Poblacion Calinan. The population includes a diverse group of micro-business owners,

such as sari-sari store operators, street vendors, and small-scale service providers, who

are particularly affected by local economic conditions, including inflation. From this

population, a sample size of 47 was determined using pre-screening sampling selection to

ensure a representative portion of the micro-entrepreneurial community.

 Micro-entrepreneurs were selected through a purposive sampling method, which

involves pre-screening potential participants based on specific criteria relevant to the

research objectives. This approach ensures that the sample includes individuals who are

most likely to provide valuable insights into the relationship between inflation rates and

income stability, while also reflecting the economic diversity within the community.

Sampling Technique

In this study, it will employ a pre-screening sampling selection followed by a

purposive sampling technique. Initially, the pre-screening stage will be used to identify

micro-entrepreneurs within Poblacion Calinan who meet specific criteria relevant to the

research, such as business’ number of employees, earn less than ₱3,000,000 of income

annually, and business’ longevity. This allows the researchers to narrow down the pool of

potential participants to those who are most likely to provide meaningful insights into the

relationship between inflation rates and income stability.

After pre-screening, the purposive sampling technique will be applied to select

participants who possess characteristics particularly relevant to the study. These include

micro-entrepreneurs who have been operating for a minimum number of years and whose

businesses are directly influenced by changes in economic conditions, such as inflation.

The purposive sampling method was chosen because it ensures that the sample includes

participants who can provide in-depth, specific information about the impact of inflation

on their income stability. This approach enables a focused exploration of the research

question and increases the likelihood of obtaining data that are directly relevant to the

study’s objectives.

Research Instruments
 In this study, a survey will be used as the primary research instrument to gather

data on the relationship between inflation rates and micro-entrepreneurs’ income stability.

The survey was designed with a combination of closed-ended and Likert-scale questions,

allowing respondents to provide quantifiable data regarding their income fluctuations and

perceived impacts of inflation. This format ensures clarity and ease of response for

participants, while also facilitating data analysis.

The information that will be gathered from the surveyed micro-entrepreneurs are

both reliable and valid due to the careful design and implementation of the research

instrument. The structured survey was pilot-tested and refined to ensure clarity and

consistency in responses, enhancing reliability by producing reproducible results across

participants. To ensure validity, the questions were crafted to directly address the core

variables—income stability and the impact of inflation—and were reviewed by experts in

economics and business to confirm their relevance to the study. Additionally, the use of

purposive sampling ensures that the data collected is representative of micro-

entrepreneurs who are most likely to be impacted by inflation, further strengthening the

validity of the findings.

Data Gathering Procedures

The following will be the procedure in order to gather the data for this study.

1. Preparation for Research Instrument and Letter of Permissions

 Develop and prepare a survey questions to gather data on income stability and the

effects of inflation on micro-entrepreneurs. Create also a letter for permission to

the micro-entrepreneur who will be chosen to participate in this study to ensure

that the researchers are following the ethical guidelines. Not just micro-

entrepreneurs that will be given a letter for permission but also for the senior high
 school principal and the school president allowing the researchers to go outside

the campus to gather data for their research.

2. Pre-Screening of Potential Participants

 Identify the micro-entrepreneurs in Poblacion Calinan who meet the criteria for

the study (e.g., years in operation, type of business, etc.). It helps the researchers

to narrow down the participant pool through pre-screening based on business

characteristics and relevance to the study.

3. Sampling and Recruitment of Participants

 The researchers will use the purposive sampling to select participants from the

pre-screened pool that met the criteria of being a micro-entrepreneur in this study.

Before gathering data from the participants, researchers must first provide

informed consent forms to participants and explain the purpose of the research to

avoid misinterpretations of the study.

4. Data Collection

 Distribute the survey to the selected micro-entrepreneurs, either through in-

person visits or online, depending on accessibility. After that, researchers will

collect completed surveys and check for completeness and consistency.

5. Data Analysis Preparation

 After the collection, researchers will organize the surveyed data for analysis.

Input data into software for statistical analysis (if necessary). Prepare the data for

correlation analysis between inflation rates and income stability.

The following will be the timeline to gather the data for this study.

NO. OF DAYS INTENDED THINGS TO DO

Preparation for Research Instrument and
Days 1 - 3
Letter of Permission/Approval
Days 4 - 6 Pre-screening of Potential Participants
 Days 7 - 9 Sampling and Recruitment of Participants

Days 10 - 14 Data Collection

Days 15 - 23 Data Analysis Preparation

Statistical Treatment

In this study, the Spearman’s rho correlation statistical technique was employed to

analyze the data, particularly because the dependent variable—income stability—was

measured on an ordinal scale. Spearman’s rho is suitable for this analysis as it assesses

the strength and direction of the monotonic relationship between two variables without

assuming a linear relationship or normal distribution. Given that our primary objective is

to examine the relationship between inflation rates and micro-entrepreneurs’ income

stability, using Spearman’s rho allows for a robust evaluation of how changes in inflation

correlate with variations in income stability, despite the ordinal nature of the data. This

method effectively aligns with our research goals by enabling us to determine whether

higher inflation is associated with greater instability in income levels among micro-

entrepreneurs, providing valuable insights into the economic dynamics at play.

Data Analysis

Ethical Consideration
 In conducting this research, several ethical guidelines were adhered to in order to

ensure the integrity of the study and protect the rights and well-being of the participants.

These guidelines include:

 Informed Consent: Prior to participation, all micro-entrepreneurs were provided

with clear information about the study’s purpose, procedures, potential risks, and

benefits. Participants were required to give their voluntary consent before being

included in the research, ensuring they understood their right to withdraw at any

time without penalty. For the permission on allowing the researchers to go

outside the campus, it was also done to ensure that the higher authorities in the

school are informed that there will be a conduct for research that will take place

outside the campus.

 Confidentiality: The confidentiality of participants was strictly maintained

throughout the research process. Personal information and responses were

anonymized, ensuring that individual identities could not be linked to the data

collected. All data was stored securely and only accessible to authorized research

personnel.

 Voluntary Participation: Participation in the study was entirely voluntary, and

participants were informed that they could decline to answer any questions or

withdraw from the study at any point without any repercussions.

 Transparency: The research team maintained transparency throughout the study

by clearly communicating the research objectives, methodology, and any

potential conflicts of interest. Participants were informed about how the results

would be used and shared.

References

APPENDIX A

Research Instrument (adopted research questionnaire)

Important Notes:

Font: Times New Roman 12

Spacing: 1.5
Margin: Left-1.25 inch, the rest-1 inch
Size: A4
Paragraph: Justify

INSTRUCTIONS PER SECTION/PART

TITLE PAGE
  Title of the research paper should be written in ALL CAPS and centered at

the top of the page.

 Below the title, include "A Research Paper Presented to The Faculty of

Senior High School Department Philippine Nikkei Jin Kai School of Calinan

Inc. Durian Village, Calinan, Davao City."

 Leave a space for the horizontal line (represented as

"____________________") before the next section.

 Write "In Partial Fulfillment of the Requirements for the Subject Practical

Research 2."

 Leave a space for another horizontal line.

 List the names of the researchers in an inverted pyramid format.

 Include the month and year of submission, centered at the bottom of the

page.

TABLE OF CONTENTS

 List all major sections (e.g., Chapter 1: Introduction, Chapter 2: Review of

the Literature, etc.) along with their respective page numbers.

 Align each section title to the left, and the corresponding page number to the

right.

 Use dot leaders to guide the reader's eye from the section title to the page

number.

CHAPTER 1: INTRODUCTION

 Start each section (e.g., Background of the Study, Statement of the Problems,

etc.) with a bolded title.

 Provide a brief description of the information to be included in each section.

  Use standard paragraph formatting for the body text (e.g., 1.5 or double-

spacing, with each paragraph indented).

Background of the Study

 Discuss the context and importance of the study, highlighting key issues or

topics that led to the research.

Statement of the Problems

 Clearly state the main problem or issues the study aims to address.

 Use numbered format if there are multiple research questions.

Research Objectives

 Specify the primary goals or objectives that the research seeks to achieve.

 Use bullet points or a numbered list to organize each objective.

Research Hypotheses

 Present the hypotheses guiding the research, using formal language.

Scope and Delimitation of the Study

 Outline the study's scope, specifying the focus area, population, and time

frame.

 Explain what the study does not cover, including limitations and constraints.

Significance of the Study

 Describe the study's contributions to stakeholders like students, researchers,

institutions, and policymakers.

Definition of Terms

 Provide definitions of key terms and concepts used in the study.

 List terms alphabetically, and define them operationally for clarity.

CHAPTER 2: REVIEW OF THE LITERATURE

  Introduce the chapter, explaining the importance of the literature review.

Review of Related Literature

 Summarize relevant studies, research findings, and theories that relate to the

current research topic.

 Organize the review by themes or chronologically, depending on relevance.

Theoretical Framework

 Explain the theories that form the foundation of the study.

 Relate each theory to the research problem and objectives.

Conceptual Framework

 Present a diagram that shows the relationships between key variables in the

study.

 Explain each element of the diagram and how they connect to the research

focus.

CHAPTER 3: METHODOLOGY

 Briefly describe what this chapter covers, including the research design,

sampling, and analysis methods.

Research Design

 Specify the research method used (e.g., descriptive, correlational,

experimental).

 Explain why this design is suitable for the study.

Research Locale

 Describe the location where the study is conducted.

 Include specific details about the setting and why it was chosen.

Research Respondents
  Identify the population and sample size.

 Provide details on how respondents were selected.

Sampling Technique

 Describe the method used for sampling (e.g., random sampling, stratified

sampling).

 Explain why this technique was chosen for the study.

Research Instruments

 Detail the tools used for data collection (e.g., questionnaires, surveys).

 Include information on the reliability and validity of the instruments.

Data Gathering Procedures

 Outline the steps taken to collect data.

 Provide a timeline or schedule for data collection.

Statistical Treatment

 Specify the statistical methods used to analyze the data.

 Justify the choice of each method based on the research objectives.

Data Analysis

 Describe how data will be processed and interpreted.

 Include any software or tools used for analysis.

Ethical Consideration

 Discuss the ethical guidelines followed during the research (e.g., informed

consent, confidentiality).

REFERENCES

 List all sources cited in the research using APA format.

 Organize references alphabetically by the authors' last names.

 Ensure accuracy in details like publication year, titles, and publishers.

APPENDIX A: RESEARCH INSTRUMENT

 Include a copy of the research questionnaire or instrument used for data

collection.

 Ensure that the format and layout are identical to the version used with

respondents.