SANTO DOMINGO –The Central Bank of the Dominican Republic (BCRD) reported that the Consumer Price Index (CPI) registered a monthly variation of 0.22% in June 2023. As a result, year-on-year inflation, measured from June 2022 to June 2023, decreased to 4.00%, the lowest rate recorded since July 2020. Thus, inflation is in the center of the target range of 4.0% ± 1.0% established in the Monetary Program.
The Central Bank of the Dominican Republic (BCRD) states in its report that core year-on-year inflation maintains a downward trend, standing at 5.33% in June 2023, showing a reduction of 196 basis points compared to the peak of 7.29% recorded in May 2022.
This indicator allows for clearer signals to be drawn for the conduct of monetary policy, because it excludes some items that do not normally respond to monetary or liquidity conditions in the economy, such as foods with highly variable prices, fuels and services with regulated prices such as electricity rates, transportation, as well as alcoholic beverages and tobacco, according to the report.
The report highlights that core inflation, more closely linked to monetary conditions, registered monthly variations of 0.32%, 0.20% and 0.36% in the months of April, May and June 2023, respectively, rates that when annualized are consistent with year-on-year inflation within the target range of 4.0%±1.0%.
Variation by Groups:
The Central Bank of the Dominican Republic (BCRD) explains that the analysis of the overall Consumer Price Index (CPI) shows that the group contributing most to inflation in June 2023 was Food and Non-Alcoholic Beverages, with a variation of 0.69%. The Miscellaneous Goods and Services group also contributed with a variation of 0.71%, as did Restaurants and Hotels with a variation of 0.57%. Conversely, the Housing and Transportation groups mitigated the overall CPI result for June with variations of -0.73% and -0.16%, respectively.
In the case of the -0.16% variation in the CPI of the Transport group, price decreases were verified in liquefied petroleum gas (LPG) for vehicles (-4.60%), premium gasoline (0.27%) and regular gasoline (-0.14%) and diesel (-0.76%), as a result of the adjustments arranged by the Government through the Ministry of Industry, Commerce and MSMEs (MICM) from May 6, 2023.
In addition, prices for automobiles (-0.11%) and tires (-0.48%) decreased. Conversely, price increases were observed for vehicle repair services (2.00%), airline tickets (1.75%), motorcycles (1.01%), vehicle batteries (0.32%), and taxi services (0.74%), which prevented the overall negative variation in this group from being larger.
The Housing group CPI registered a variation of -0.73%, mainly due to the 4.60% reduction in the price of liquefied petroleum gas (LPG) for domestic use, with the drop in kerosene prices (-13.29%) also contributing. Meanwhile, the cost of renting housing increased by 0.34%.
The report states that the price index for the Food and Non-Alcoholic Beverages group grew by 0.69% in June 2023, mainly due to price increases observed in some items with high weight in the family basket such as fresh chicken (0.81%), tomatoes (16.57%), garlic (14.44%), onions (6.84%), coffee (3.10%), green plantains (1.61%), rice (0.63%), among others; while price decreases were recorded for eggs (-5.96%), sour lemons (-36.91%), pork (-1.76%) and avocados (3.45%).
The 0.71% growth in the CPI for the Miscellaneous Goods and Services group is mainly due to the 0.82% increase observed in the prices of both services and personal care items.
Regarding the 0.57% inflation rate for the Restaurants and Hotels group, it is essentially due to increases in the prices of food services prepared outside the home, such as the daily special (0.69%), chicken service (0.52%), grocery service with side dishes (0.27%), empanadas (0.79%) and juices (0.69%).
Inflation of Tradable and Non-Tradable Goods:
The Central Bank explains that the CPI for tradable goods, those that can be exported and imported without restrictions, registered a variation of 0.01% in June. This was due to price decreases in some food items, such as eggs, limes, pork, and avocados, which were offset by price increases in tomatoes, garlic, lettuce, coffee, green plantains, and other goods. The index for non-tradable goods and services, those that by their nature can only be traded within the economy that produces them or are subject to measures that limit their import, grew by 0.46%. This increase was driven by price hikes in the daily special, housing rental services, vehicle repair services, men's haircuts, hair washing and styling, chicken service, fresh chicken, onions, rice, sugar, and other items.
Inflation by Geographic Area:
Analysis of price indices by geographic region shows that the CPI for the Ozama region, which includes the National District and Santo Domingo province, increased by 0.23%, the North region by 0.19%, the East region by 0.20%, and the South region by 0.30%. The higher variation observed in the CPI for the South region is explained by the greater impact of the Food and Non-Alcoholic Beverages group in this geographic area.
Inflation by Quintiles:
The report indicates that the behavior of the CPI by socioeconomic strata shows that the lowest income quintiles registered similar growth rates: 0.29% for quintile 1 and 0.28% for quintiles 2 and 3. This was mainly due to price increases in the Food and Non-Alcoholic Beverages and Miscellaneous Goods and Services groups, which were partially offset by the negative variation in the Housing group. Meanwhile, the indices for the highest income quintiles (4 and 5) experienced increases of 0.22% and 0.13%, respectively, because the price increases in food and the Miscellaneous Goods and Services group were mitigated by the drop in fuel prices.
