The Central Bank of the Dominican Republic (BCRD) reports that the consumer price index (CPI) registered a variation of 1.18% with respect to December 2021, while year-on-year inflation, measured from January 2021 to January 2022, it was placed at 8.73%.
The report released by the BCRD explains that inflationary pressures have been more persistent than expected, so the Monetary Board through the Open Market Operations Committee (COMA) authorized the BCRD to increase the monetary policy rate by 200 basis points to 5.0% per year.
Likewise, I agree with this sign of change of monetary policy stancebill and note auctions have been carried out that have managed to substantially reduce the money supply in circulation and have contributed to generating an exchange appreciation in recent weeks.
These measures will facilitate the gradual convergence of inflation to the target range of 4% ± 1% over the monetary policy horizon.
The BCRD report establishes that core inflation for the month of January 2022 was 0.65% compared to December 2021. This indicator excludes some items whose prices tend to be volatile or do not normally respond to monetary conditions, such as the case of goods or services with regulated prices.
In this sense, underlying inflation isolates the behavior of certain foods with great variability in their prices, as well as fuels, services such as electricity rates and transportin addition to alcoholic beverages and tobacco, thus allowing clearer signals to be extracted for conducting monetary policy.
The governing body of monetary policy highlights that price dynamics continues to be affected by external shocks.
In particular, the price of a barrel of intermediate oil from Texas (WTI) continued to increase its price, going from an average of US$71 in December 2021 to an average of US$83 during January 2022, conditioned by production limitations. world crude oil and geopolitical tensions in some producing countries.
Likewise, other important raw materials for local production such as soybeans, corn and wheat, registered new increases during the month of January 2022 of the order of 9.40%, 4.57% and 1.29%, respectively. Likewise, the high cost of container transport remains, which affects the prices of imported goods.
Variation of prices by groups
The BCRD analysis shows that the groups with the highest contribution to inflation were housing (3.45%), food and non-alcoholic beverages (1.17%) and transportation (0.88%)which explained 75% of headline inflation in January 2022.
To a lesser extent, the positive variations in the price indices of the groups miscellaneous goods and services (0.70%), restaurants and hotels (0.77%) and education (2.17%).
It adds that the housing group, first in contribution in the general CPI for the month of January 2022, varied 3.45%, as a result of the increase in electricity service rates by 15.43%, provided for in the resolution of the Superintendence of Electricity, in the framework of the National Agreement for the Reform of the Electricity Sector.
In addition, the behavior of this group was influenced by the rises in liquefied petroleum gas for domestic use (LPG) by 2.20%, home maintenance services by 0.89%, and painting (0.59%).