He central bank of the Dominican Republic (BCRD) reported today that the monthly variation of the Consumer Price Index (CPI) was 0.11% in February 2023. In this sense, the YoY inflationthat is, of the last 12 months, fell 86 basis points, going from 7.24% in January 2023 to 6.38% in February of this year.
In a press release, the BCRD indicated that the year-on-year core inflation was located in 6.40% at the end of February 2023, less than the 6.60% observed in January of said year. This indicator makes it possible to extract clearer signals for the conduct of monetary policy since it excludes some items that do not respond to monetary conditions, such as foods with great variability in their prices, as well as fuels and services with regulated prices such as electricity rates. , transportation, in addition to alcoholic beverages and tobacco.
The institution considered it important to mention that “the downward behavior of the inflation It is mainly due to the fact that inflationary dynamics continue to respond favorably to the combination of monetary policy measures adopted by the central bank and the subsidies from the government to the fuels and the agricultural sector, together with the freezing of electricity rates“.
“In addition, the prices of most of the commodities with respect to the levels registered in previous months, at the same time as the transport costs of containers globally have decreased considerably,” he said.
Behavior of the economy
Regarding the behavior of the Dominican economy, the central bank reported that it has experienced a moderation in its rate of growth from the fourth quarter of 2022, as was foreseeable, associated with a slowdown in domestic demand, mainly evidenced in the investment component due to the contraction in construction activity.
“In effect, during the month of January of this year the Monthly Indicator of Economic Activity (IMAE) registered an interannual variation of 0.4%, explained to a greater extent by the performance of construction, which continues to reflect the increase in the costs of the main inputs in this sector such as cement, rods, paints, which caused an increase in housing prices,” he said.
Another factor that has had an impact -according to the bank- on the behavior of this activity has been the readaptation of the works construction schedules due to the effects of the higher interest rates market. In addition, “the execution of spending on public investment has been below the speed originally contemplated in the General State Budget.”
The BCRD expects that during 2023 once the year-on-year inflation converges to the target range established in the Monetary Program of 4% ± 1% and the conditions are given for the beginning of the normalization of the Monetary Policy, this should contribute to the year-on-year expansion of the Dominican economy gradually recovering.
Variation by groups of inflationon
When analyzing in detail, the behavior of the general CPI shows that the group with the greatest contribution to the decline inflation February 2023 was Food and Non-Alcoholic Beverages, registering a negative variation rate of 0.44 %. In addition, the result of -0.79% of the Communications group index had an impact.
In the opposite direction, the groups contributed Miscellaneous Goods and Services (0.80%), Restaurants and Hotels (0.86%) and Housing (0.30%).
The variation of -0.44% in the price index of the Food and Non-Alcoholic Beverages group is mainly due to the price decreases observed in high-weight items in the family basket such as green plantains (-8.63%), potatoes (-16.50%), onions (-13.43%), chili peppers (-7.33%), ripe plantains (-6.79%), garlic (-8.45%), tomatoes (-4.85%) and fresh chicken (-0.19%).
While other food goods registered increases in their prices:
- sour lemons (16.76%)
- pasteurized orange juice (3.50%)
- eggs (1.30%)
- pork (1.39%)
- chicken broth (1.75%)
- green pigeon peas (6.20%)
- rice (0.33%)
The price index corresponding to the group communications reflected a variation of -0.79% in February 2023, basically due to the drop in prices of the combined services of telephony, pay television and internet in -2.52%, specifically in the services of streaming.
Regarding the group price index Miscellaneous Goods and Servicesit grew 0.80% during February 2023, mainly due to price increases registered in services and personal care items, which varied 1.01% and 0.84%, respectively.
The growth of 0.30% in the CPI of the group living place is basically explained by increases in:
- 0.63% in the services of rental housing
- he maintenance of housing (0.34%)
The CPI of the Restaurants and Hotels group varied 0.86% essentially due to increases in the prices of food services prepared outside the home such as Dish of the day (0.79%), sandwiches (0.84%) and juices served outside the home (0.93%).
“It is important to note that the rise in the price index observed for this group is the result of increases in the prices of the basic inputs for its production, including meats, oils, rice, breads, sausages, fishcheese, among others, which directly affect the consumer price of these food services,” said the central bank.
Inflation by geographic areas
The results of the CPI by geographic region in February 2023 show that the Ozama region index, which includes the National District and the province Santo Domingo, varied 0.17 %; in the North region -0.03%; East region 0.30% and the South region 0.04%.
“The inflation negative verified in the CPI of the North Region It is explained by the higher incidence of the Food and Non-Alcoholic Beverages group in that region. The greater variation registered in the index of the Eastern region is the result of the increase in prices of the housing rental service and the smaller contribution of the drop in the CPI of the Food and Non-Alcoholic Beverages group in this geographical area,” said the central bank.
Regarding the behavior of the CPI by socioeconomic strata, it shows that the quintiles with the lowest income, that is, 1, 2 and 3, registered variations of 0.08% in quintile 1, 0.05% in quintile 2 and 0.07% in quintile 3, due to that the increases registered in the groups Goods and Miscellaneous Services and Restaurants and Hotels, were neutralized by the decreases in the prices of the Food and Non-Alcoholic Beverages group, which has a greater relative weight in the baskets of those quintiles.
While the indices of the highest income quintiles (4 and 5), experienced variations of 0.03% and 0.16%, respectively, because in quintile 4, the increases in the CPI prices of the Miscellaneous Goods and Services group were offset due to the drop in the price of cars and food. In the result of the CPI of quintile 5, the rise in the prices of air tickets had an impact.
