ECLAC estimates GDP growth of 5.5% in the Dominican Republic this year, driven by the expansion of exports, tourism revenues and foreign investment.
SANTO DOMINGO - The Central Bank of the Dominican Republic (BCRD) reported that the monthly variation of the consumer price index (CPI) in December 2021 was 0.73%, placing the year-on-year inflation, measured from December 2020 to December 2021, at 8.50%, exceeding the estimates made by the governor of the institution, Héctor Valdez Albizu.
Analysis of the overall CPI results for December 2021 shows that the groups with the greatest impact were Food and Non-Alcoholic Beverages (0.81%), Transportation (0.80%), and Housing (0.90%), together explaining 63% of the inflation for the last month of 2021. In addition, the Miscellaneous Goods and Services (0.85%) and Restaurants and Hotels (0.94%) groups contributed.
The price index for the housing group reflected a variation of 0.90% in December 2021, explained mainly by the 2.78% increase in the price of domestic liquefied petroleum gas (LPG), the housing rental service (0.58%) and some items of conservation and repair of the home (0.96%), such as painting (1.35%) and housing maintenance services (0.75%).
The Central Bank of the Dominican Republic (BCRD) reports that annualized core inflation reached 6.87% in December 2021. It explains that this indicator excludes certain items whose prices tend to be volatile or do not typically respond to monetary conditions. In this sense, core inflation isolates the behavior of certain food items with highly variable prices, as well as fuels, regulated and transportation services, alcoholic beverages, and tobacco, thus allowing for clearer signals to guide monetary policy.
The institution reiterates that the evolution of domestic prices has been impacted by the situation in international trade markets, where bottlenecks in supply chains have occurred, combined with substantial increases in container and global freight rates. Other external factors have also played a role, such as the increase in prices for food inputs and other raw materials.
The Consumer Price Index (CPI) for the Food and Non-Alcoholic Beverages group registered a variation of 0.81% in December 2021, explained by price increases in coffee (9.10%), eggs (3.57%), green plantains (3.32%), potatoes (7.86%), limes (25.94%), green bananas (3.42%), pork (2.00%), tomato paste (3.03%), red onions (3.16%), avocados (7.01%), beef (1.24%), pumpkin (7.32%), cod (1.72%), and carrots (7.45%), among others. However, some food items registered price decreases, such as green pigeon peas (-19.24%) and chili peppers (-2.96%).
Inflation in the Transportation sector in December 2021 was 0.80%. This was primarily due to price increases in airfares (14.65%), liquefied petroleum gas (LPG) for vehicles (2.78%), regular gasoline (0.27%), and diesel (1.27%), resulting from weekly adjustments mandated by the Ministry of Industry, Commerce, and SMEs (MICM) in compliance with Law 112-00 on Hydrocarbons. Additional contributing factors included price increases for land transportation services such as motorcycle taxis (1.52%), taxis (3.10%), shared taxis (0.65%), automobiles (0.61%), and vehicle repair services (0.53%).
ECLAC urges the Dominican Republic to control inflation
It is vital that the Dominican Republic control inflation, seeking to minimize its social impact , as it showed a significant spike in 2021, which disproportionately affects low-income families, stated Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) .
The newspaper Hoy reports that the representative of the organization suggested that the country make extensive use of monetary policy tools, as well as their coordination with fiscal policy and sectoral policies.
“Social policies and pro-employment policies are key this year to continue boosting economic recovery, as well as particular support for sectors that were most affected by the pandemic, such as the tourism sector,” he said.
ECLAC estimates GDP growth of 5.5% in the Dominican Republic this year, driven by the expansion of exports, tourism revenues and foreign investment.
