SANTO DOMINGO.– The Central Bank of the Dominican Republic (BCRD) reported that the consumer price index (CPI) registered a monthly variation of 0.40% in August 2024, lower than the rate of 0.53% observed in the previous month of July.
The Central Bank of the Dominican Republic (BCRD) states that this result is largely explained by the slowdown in the rate of food price increases. With this behavior, year-on-year inflation, that is, inflation over the last twelve months, fell from 3.54% in July to 3.42% in August 2024, remaining between the lower limit and the midpoint of the target range of 4.0% ± 1.0% for the ninth consecutive month since December 2023.
The monetary policy authority indicates that core inflation over the past twelve months stood at 4.05% at the close of August 2024. Thus, core inflation remains around the midpoint of the target set by the institution. This indicator provides clearer signals for conducting monetary policy because it excludes certain items that do not typically reflect liquidity conditions in the economy, such as food with highly volatile prices, fuels, and services with regulated prices like electricity and transportation, as well as alcoholic beverages and tobacco.
The Central Bank of the Dominican Republic (BCRD) indicates that with this year-on-year inflation rate of 3.42% in August 2024, the Dominican Republic would be among the countries with the lowest inflation in Latin America, excluding dollarized economies (Panama, Ecuador, and El Salvador).
Regarding the analysis of the overall monthly CPI, comparing August to July 2024, the institution indicates that the Food and Non-Alcoholic Beverages group experienced a variation of 0.42%, lower than the 1.42% increase observed in July. The items with the greatest impact in this group were fresh chicken, green and ripe plantains, bananas, and rice, among others. It is worth noting that the decrease in the price of fresh chicken, the food item with the greatest weight in the basket, is mainly due to the effect of the high temperatures recorded at this time of year, which reduce the productivity of this sector. Conversely, avocados, onions, oranges, chili peppers, and eggs experienced price decreases.
The BCRD note highlights that the Recreation and Culture group was the second largest contributor to the variation in the CPI for the month of August 2024, showing an increase of 3.73%, explained by the increases in cultural and recreation services, particularly in games of chance (lottery), tourist packages, gym memberships and school books.
The price index for the Education group rose 2.10% due to increases in private school fees, a characteristic of school enrollment that typically occurs during this period, particularly in primary, secondary, and preschool education. Additionally, increases were observed in university education services. Other components of school spending that showed positive variations during August were school books and uniforms.
Regarding inflation for Miscellaneous Goods and Services, the Central Bank of the Dominican Republic (BCRD) report indicates that it reached 0.35%, driven by price increases in personal care services. Meanwhile, the Restaurants and Hotels sector showed a variation rate of 0.38%, resulting from price increases in meals prepared outside the home, primarily in daily specials, chicken, and side dishes. It should be noted that the increase in the food service price index is due to the rise in the cost of basic inputs necessary for production, which directly impacts the final price paid by consumers for these services.
To a lesser extent, the Transportation group contributed to the month's variation with a rate of 0.16%, explained by increases in the prices of automobiles and taxi services. It should be noted that the measures implemented by the Executive Branch, including the subsidy for domestic fuels, have mitigated the impact of this group on the overall CPI variation.
Likewise, the Health sector saw an increase in inflation of 0.38% due to the increases in antihypertensive drugs.
Inflation of tradable and non-tradable goods:
The CPI for tradable goods experienced a variation of 0.18% in August 2024, due to price increases observed in some food items, automobiles, antihypertensive medications, and tour packages. Regarding the monthly variation of the index for non-tradable goods and services, it stood at 0.63%.
Inflation by Geographic Area:
The Central Bank of the Dominican Republic (BCRD) explains that inflation by geographic region in August, compared to July 2024, shows that the price index for the Ozama region, which includes the National District and Santo Domingo province, grew by 0.35%, for the East region by 0.33%, and for the South region by 0.37%. The North region registered an inflation rate of 0.52%, due to the higher impact of the Food and Non-Alcoholic Beverages, Recreation and Culture, and Miscellaneous Goods and Services groups.
Inflation by Quintiles:
The monetary authority's report indicates that the price indices for socioeconomic strata reflected variation rates of 0.31% for quintile 1 and 0.37% for quintiles 2 and 3. Regarding the highest income quintiles, quintiles 4 and 5, these showed variations of 0.39% and 0.36%, respectively. The lower rate observed in quintile 1 is primarily due to the lower relative impact of the Miscellaneous Goods and Services, Education, and Transportation groups.
