The Central Bank of the Dominican Republic (BCRD) reported this Monday that the monthly variation of the consumer price index (CPI) continues to moderate for the second consecutive month, registering 0.29% in the month of September, after 0.21% in the month of August, both variations below the threshold of 0.33% consistent with annualized inflation in the center of the target range of 4% ± 1%.
The governing body of monetary policy established that with this result, the accumulated inflation for January-September 2022 was 6.01%while year-on-year inflation, measured from September 2021 to September 2022, continues its downward path, standing at 8.63 % in September, for a reduction of 100 basis points from the peak of 9.64% Registered in April of this year.
He highlighted in his report that the recent behavior of inflation, associated with the implementation of monetary policy measures adopted in a timely and prudent manner, allows it to be projected that it would be converging to the target range of 4% ± 1%.
He added that the downward trend that year-on-year inflation has registered reflects the effectiveness of the subsidies implemented by the Government for fuels, the pause in electricity rate adjustments, as well as the initiatives to mitigate the impact of high costs of the inputs of agricultural production, which has allowed the inflation of the food group not to be higher; meanwhile, targeted monetary aid has helped the most vulnerable population to better navigate this period of rising prices on a global scale.
He also underscored that the positive evolution and dynamism of foreign exchange-generating activities (tourism, exports, remittances and foreign direct investment), has favored the relative stability of the exchange rate, which has partially offset the impact of the imported component on prices.
Regarding core inflation, the BCRD explains that it was 0.51% in the month of September 2022. In year-on-year terms, it fell from 7.12% in august to 7.04% in September 2022.
It should be noted that this indicator isolates the behavior of certain foods with great variability in their prices, as well as fuels, services with regulated prices such as electricity tariffs, transportation, and alcoholic beverages and tobacco, with the aim of extracting signals more clear for the conduct of monetary policy.
He stressed that the behavior of inflation in the domestic sphere, as in the rest of the world’s economies, has been affected by external factors that have been more persistent than expected.
However, there has recently been a moderation in the international prices of inputs such as oil and food, which are used as raw material for local production, combined with lower container prices after the substantial increase recorded in the period of the covid-19 pandemic..
Inflation continues to be influenced by the second-round effects of these external components and by domestic demand pressures, to the extent that the momentum of economic activity continues.
Despite this recent moderation in inflationary pressures, inflation is at high levels worldwide, which is why most central banks continue to implement restrictive monetary measures with sequential increases in their monetary policy rates, in order to contribute to the convergence of inflation towards the objectives established in the respective monetary policy schemes of each country.
Variation by groups
The analysis of the behavior of the general CPI shows that the groups that contributed the most to inflation in September 2022 were Food and Non-Alcoholic Beverages, varying 0.37%, Miscellaneous Goods and Services (0.84%), Education (2.85%), Restaurants and Hotels (0.50%), Housing (0.26%) and Furniture and Household Items (0.56%).
The negative variation of 0.41% observed in the Transportation group contributed to the moderate inflation in September 2022.
The variation of 0.37% in the price index of the Food and Non-Alcoholic Beverages group is mainly explained by the price increases observed in green plantains (2.08%), cassava (2.99%), onions (3.98%), pigeon peas greens (4.62%), sour lemons (14.15%), pork (1.05%), pineapple (5.83%), yautia (7.41%), rice (0.27%), purified water (0.54%), liquid milk (0.85 %), sweet potatoes (6.04%) and soft drinks (0.65%), while other food goods registered price decreases such as avocados (-15.91%), fresh chicken (-0.83%), garlic (-6.67%) and oranges ( -8.20%).
The CPI for the Miscellaneous Goods and Services group grew 0.84% ​​in September 2022, mainly due to increases in the prices of services and personal care goods, rising 0.91% and 1.02%, respectively.
As for the price index of the Transportation group, it shows a decrease of 0.41% in the month of September 2022, mainly due to the decrease in the prices of air tickets (-16.59%) and automobiles (-0.97%). . In the opposite direction, it contributes the increase in the vehicle repair service (1.08%).
It is important to point out that the measures implemented by the Executive Power, by disposing of the subsidy for domestic fuels, greatly affect the behavior of this group, reducing its impact on the variation of the general CPI.
Regarding the 2.85% increase in the price index of the Education group, this is explained by the increases in private schools and some university education enrollments, which are seasonally registered in the month of September.
In this sense, the rate of primary education varied 5.11%, secondary 4.63% and preschool 5.63%, while university education increased 1.00%. Other components of school spending that reflected positive price variations were notebooks (1.57%) and school transportation (1.64%).
The increase of 0.50% of the CPI of the Restaurants and Hotels group responds, mainly, to the increase in the prices of the services of meals prepared outside the home as a dish of the day (0.51%), food service with accompaniment (0.57%), service chicken (0.34%), pizza (0.73%) and empanadas (0.80%). The Housing group price index grew 0.26%, as a result of the increase in housing rental services (0.36%), common expenses in co-ownership (3.28%) and paints (0.49%). While the variation of 0.56% in the CPI of the Furniture and Household Items group is largely due to the increases in goods and services for home maintenance (0.84%).
Inflation of tradable and non-tradable goods
The report indicated that the CPI for tradable goods, those that can be exported and imported free of restrictions, varied 0.18% in September 2022, while the price index for non-tradable goods and services, that is, those that by their nature they can only be marketed within the economy that produces them or are subject to measures that limit their imports, varied 0.41%.
Inflation by geographic area
As for the analysis of the price indices by geographic region, it shows that the CPI for the Ozama region, which includes the National District and the Santo Domingo province, varied by 0.31%, the North region by 0.25%, and the East and South regions by 0.38% and 0.26%. %, respectively.
The slightly higher variation registered in the CPI for the eastern region is explained, basically, by the lower incidence in this geographical area of ​​the Transportation group, which in the aforementioned month presented a decrease in prices.
Inflation by quintiles
The BCRD explained that the behavior of the CPI by socioeconomic strata reveals that the quintiles with the lowest income registered variations of 0.37% in quintile 1; 0.40% in quintile 2 and 0.38% in quintile 3, with the rises in the price indices of the Food and Non-Alcoholic Beverages, Miscellaneous Goods and Services and Education groups affecting this behavior.
As for the quintiles with the highest income (4 and 5), they registered inflation rates of 0.30% and 0.15%, respectively, due to the fact that the negative variation of the CPI of the Transportation group partially offset the growth of the price indices of the groups Education, Diverse Goods and Services and Housing.