SANTO DOMINGO.– The Central Bank of the Dominican Republic (BCRD) reported that the Consumer Price Index (CPI) registered a monthly variation of -0.20% in May 2023, resulting in the year-on-year inflation measured from May 2022 to May 2023 being reduced to 4.43%, this being the lowest rate verified since July 2020.
In this way, inflation returns to its target range of 4.0% ± 1.0% established in the monetary program, converging ahead of schedule, the agency said in a press release.
The Central Bank of the Dominican Republic (BCRD) states in its report that core year-on-year inflation continues its downward trend, reaching 5.51% in May 2023 (178 basis points below the peak of 7.29% recorded in the same month of 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," says the Central Bank of the Dominican Republic (BCRD).
Furthermore, the study highlights that core inflation, more closely linked to monetary conditions, has been registering monthly variations of 0.28%, 0.32% and 0.20% in the months of March, April and May 2023, respectively, rates that when annualized are consistent with year-on-year inflation within the target range of 4.0% ± 1.0%.
Similarly, it highlights that the negative variation observed in the overall CPI during May 2023 is mainly explained by the decrease in fuel prices set by the government, as well as the drop in the price of fresh chicken and bananas, foods with a high weight in the family basket
Variation by Groups:
The Central Bank of the Dominican Republic (BCRD) explains that the analysis by groups of the overall Consumer Price Index (CPI) shows that the group with the greatest impact on inflation in May 2023 was Food and Non-Alcoholic Beverages, with a variation of -0.63%. The Housing (-0.62%) and Transportation (-0.31%) groups also contributed. Conversely, positive variations were observed in the indices of the Restaurants and Hotels (0.40%), Miscellaneous Goods and Services (0.30%), and Education (0.90%) groups.
The report states that the -0.63% variation in the price index of the Food and Non-Alcoholic Beverages group, the one that contributes the most to the overall CPI result, is mainly due to the price decreases observed in items with high weight in the family basket such as fresh chicken (-3.72%), green plantains (-5.77%), sour lemons (-27.67%), chili peppers (-9.51%), eggs (-1.91%), green bananas (-3.01%), onions (-4.79%), ripe plantains (-4.95%) and passion fruit (-7.13%), while other food items registered price increases such as rice (1.29%), avocados (12.10%), oranges (11.25%), pumpkin (6.59%) and cassava (1.13%).
Meanwhile, the Housing CPI, the second largest contributor to the overall index in May 2023, showed a variation of -0.62%, mainly due to a 3.69% reduction in the price of liquefied petroleum gas (LPG) for domestic use, with the 4.30% drop in kerosene prices also contributing. Rental housing services, on the other hand, increased by 0.20%.
The -0.31% change in the Transportation group's Consumer Price Index (CPI) primarily reflects price decreases in liquefied petroleum gas (LPG) for vehicles (-3.69%), premium (-0.42%) and regular (-0.22%) gasoline, and diesel (-0.26%), resulting from weekly adjustments implemented by the Ministry of Industry, Commerce, and SMEs (MICM) starting May 6, 2023. Additionally, automobiles (-0.33%) and tires (-1.69%) also saw price decreases. Conversely, airfare prices increased (3.50%), preventing the negative change in this group from being even greater.
The CPI for the Restaurants and Hotels group varied 0.40% essentially due to increases in the prices of prepared food services outside the home such as the dish of the day (0.45%), chicken service (0.40%), grocery service with side dishes (0.27%), sandwiches (0.44%) and juices served outside the home (0.57%).
The 0.30% variation in the CPI for the Miscellaneous Goods and Services group is primarily due to price increases in services and personal care items, which rose by 0.70% and 0.07%, respectively. Meanwhile, the price index for the Education group showed a 0.90% variation in May 2023, mainly due to the increase in university tuition fees (2.00%).
