SANTO DOMINGO – The Central Bank of the Dominican Republic (BCRD) reported that the Consumer Price Index (CPI) registered a monthly variation of 0.45% in July 2023. With this result, the year-on-year inflation rate, measured from July 2022 to July 2023, stood at 3.95%, below the midpoint of the target range of 4.0% ± 1.0% established in the monetary program, and the lowest rate recorded since July 2020.
The report released by the monetary institution explains that core year-on-year inflation maintains a downward trend, standing at 5.05% in July 2023, showing a reduction of 224 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.
The report highlights that core inflation verified monthly variations of 0.20%, 0.36% and 0.34% in the months of May, June and July 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 BCRD explains that the analysis of the results of the general CPI for the month of July 2023 showed that the groups of goods and services experienced variations consistent with maintaining the behavior of inflation slightly below the central point of the target range of the monetary program.
In this regard, the group that contributed most to inflation was Food and Non-Alcoholic Beverages, rising 1.08%. Other contributing factors included Transportation (0.41%), Restaurants and Hotels (0.53%), and Miscellaneous Goods and Services (0.33%). The Housing group registered a 0.16% increase, mitigating the overall CPI result for July.
The 1.08% increase in the Food and Non-Alcoholic Beverages group price index is mainly due to price increases observed in some goods such as fresh chicken (2.02%), green plantains (3.43%), tomatoes (17.39%), sugar (5.81%), chili peppers (10.50%), onions (8.09%), potatoes (7.92%), and rice (0.56%), among others. Conversely, other food items showed price decreases, such as limes (-21.90%), avocados (-3.49%), and pork (-0.95%), partially mitigating the group's overall index increase.
The Consumer Price Index (CPI) for the Transportation group reflected a 0.41% increase in July, mainly due to price hikes in automobiles (1.76%), airfare (12.66%), and taxi services (0.80%). Additionally, as a result of weekly adjustments implemented by the Ministry of Industry, Commerce, and SMEs (MICM), slight price adjustments were observed in premium (0.05%) and regular (0.04%) gasoline, as well as diesel (0.02%); meanwhile, the price of liquefied petroleum gas (LPG) for vehicles decreased by 2.22%.
The report states that the 0.53% variation in the Restaurants and Hotels group index, the third largest contributor to the overall CPI in July 2023, is primarily due to price increases in prepared food services outside the home, such as daily specials (0.66%), grocery delivery with side dishes (0.38%), chicken (0.35%), juice served outside the home (0.70%), sandwiches (0.44%), empanadas (0.47%), and pizza (0.45%). It is important to note that the rise in the price index observed in food service delivery is a result of increased prices for basic inputs used in food preparation, which directly impact the consumer price of these food services.
The price index for the Miscellaneous Goods and Services group grew 0.33% in July 2023, mainly due to higher prices in personal care services (0.53%) and personal care items (0.31%).
It also adds that the Housing group's CPI registered a variation of -0.16%, mainly due to the 2.22% reduction in the price of liquefied petroleum gas (LPG) for domestic use, with the drop in kerosene prices (-9.16%) also contributing. Meanwhile, the cost of renting housing increased by 0.41%.
Inflation by Geographic Area:
The Central Bank of the Dominican Republic (BCRD) reports that the analysis of the Consumer Price Index (CPI) by geographic region shows that the index for the Ozama region, which includes the National District and Santo Domingo province, increased by 0.46%, the North region by 0.46%, the East region by 0.34%, and the South region by 0.54%. 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. It is worth noting that the lower variation in the CPI for the East region is due to the fact that the price of housing rentals remained unchanged in July for this region, unlike the other areas where an increase was recorded for this item.
