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In 2012, Filipino families had an annual income of 235 thousand pesos, on average. In comparison, their expenditure for the same year was 193 thousand pesos, on average. These figures translate to an average annual savings of 42 thousand pesos per family (Table 1). These estimates are based on the results of the 2012 Family Income and Expenditure Survey (FIES), and were computed at prices in year 2012. Considering the inflation in the period 2009-2012, the average annual family income in 2012 would be valued at 180 thousand pesos at 2006 prices, while the average annual family expenditure would be valued at 148 thousand pesos (Table 1).

The gap in income between the richest decile and the poorest decile remains wide. Families in the richest decile, earned an annual income of 715 thousand pesos in 2012 or 60 thousand pesos monthly, on average. On the other hand, the families in the poorest decile, earned an average annual income of 69 thousand pesos or about 6 thousand pesos monthly. The income of the families in the richest decile is 10 times that of the poorest decile. This finding is true for both 2009 and 2012. For this report, families were ranked according to their per capita income and were grouped into per capita income deciles. The richest decile represents families belonging to the top 10 percent in terms of per capita income, while the poorest decile represents families in the bottom 10 percent.

The survey results also showed that families in the richest decile spent 503 thousand pesos in 2012, on average. They generated savings of 213 thousand pesos for the year, on average. In contrast, the families in the poorest decile had expenses exceeding their income (Table 2A). However, at 2006 prices, the income of families in all per capita income deciles had hardly changed within the period 2009-2012 (Table 2B).

At the regional level, at 2012 prices, all regions exhibited an increase in average annual family income. Families in the National Capital Region (NCR), had the highest annual income at 379 thousand pesos, on average. In contrast, families in Autonomous Region in Muslim Mindanao (ARMM) had the lowest annual income at 130 thousand pesos, on average. However, at 2006 prices, eight regions showed a decline in average annual family income (Table 3B).

In terms of the income distribution among families, at the national level, the *Gini *coefficient, which is a measure of income inequality, was estimated at 0.4605 for year 2012. In 2009, it was 0.4641, which may indicate some improvement in the income distribution among families. Across regions, the coefficient ranged from 0.2882 to 0.4844 (Table 4). A *Gini *coefficient equal to 0 indicates perfect income equality among families, while value of 1 indicates absolute income inequality.

In terms of the pattern of spending among Filipino families, the expenditure on food accounted for 42.8 percent of the total family expenditure. The expenditure on housing, water, electricity, gas and other fuels was the second largest percentage at 20.7 percent. Among families in the bottom 30 percent per capita income group, expenses on food accounted for two-thirds (62.3%) of the total family expenditure, followed by expenditure on housing, water, electricity, gas and other fuels at 15.3 percent. In contrast, families in the upper 70 percent per capita income group, spent 39.7 percent of their total expenditure on food, and 21.5 percent on housing, water, electricity, gas and other fuels (Table 5).

The 2012 Family Income and Expenditure Survey (FIES) is a nationwide survey of households undertaken every three years by the National Statistics Office (NSO). It is the main source of data on family income and expenditure.

(Sgd.) CARMELITA N. ERICTAAdministrator |

**TECHNICAL NOTES**

The 2012 Family Income and Expenditure Survey (FIES) is a nationwide survey of households undertaken every three years by the National Statistics Office (NSO). It is the main source of data on family income and expenditure, which include among others, levels of consumption by item of expenditure as well as sources of income in cash and in kind. The results of FIES provide information on the levels of living and disparities in income of Filipino families, as well as their spending patterns.

The 2012 FIES is a sample survey designed to provide income and expenditure data that are representative of the country and its 17 regions. It used four replicates of the 2003 Master Sample (MS) created for household surveys on the basis of the 2000 Census of Population and Housing. The 2003 MS has been designed to produce the sample size needed for large surveys, like the FIES. To facilitate subsampling, the 2003 MS has been designed to readily produce four replicate samples from the full set of sampled PSUs.

In the 2003 MS, a stratified, three-stage sampling design was employed: the selection of Primary Sampling Units (PSUs) for the first stage, sample enumeration areas (EAs) for the second stage, and sampling units for the third stage. The domains are the regions which were stratified by province, highly urbanized city (HUC), independent component city (ICC), and other factors within the geographical strata. The overall sampling fractions vary across regions to generate adequate sample size for each region. Survey weights are used in order to produce valid estimates of the population parameter. Base weights are computed to compensate for the unequal selection probabilities in the sample design. These were adjusted to account for unit nonresponse and to conform to known population distributions (eg. projected population counts).

Starting 2012 FIES, the survey adopted the 2009 Philippine Classification of Individual Consumption According to Purpose (PCOICOP). The 2009 PCOICOP is the first standard classification of individual consumption expenditure in the country prepared by the National Coordination Board (NSCB) in collaboration with concerned agencies in the Philippine Statistical System (PSS). The PCOICOP was patterned after the 1999 Classification of Individual Consumption According to Purpose (COICOP) issued by the United Nations Statistics Division (UNSD).

The 2012 FIES enumeration was conducted twice – the first visit was done in July 2012 with the first semester January to June as the reference period; the second visit was made in January 2013 with the second semester of 2012, that is, July to December 2012 as reference period. The same set of questions is asked for both visits.

The number of families for the 2012 and 2009 FIES was estimated using the household population estimate, derived by applying the growth rate (PGR) based on the household population counts from the 2000 and 2010 Census of Population and Housing (CPH).

The set of samples selected for the 2012 FIES is only one of the possible sets of samples of equal size that have been selected from the same population using the same sampling design. Estimates derived from each of these sets of samples would differ from one another. Sampling error is a measure of the variability of the estimates among all possible sets of samples. It is usually measures in terms of the standard errors for a particular statistic.

The standard error can be used to calculate confidence intervals within which the true value for the population can reasonably be assumed to fall. For example, for any given statistic calculated from a sample survey, the value of that statistic will fall within a range of plus or minus two times the standard error of that statistic in 95 percent of all possible samples of the same size and design.