The BC specifies inflation is lower than in ten countries

The Central Bank (BCRD) specified that the annualized inflation of the Dominican Republic is below the average of 10 countries in the region, from a list of 18, which currently register a higher annualized variation of the CPI and, furthermore, that the methodology used responds to an Inflation Target Scheme used by international organizations.

“To make an analysis of the behavior of inflation using periods longer than twelve months, to deliberately, for particular reasons and interests, present the country at the juncture as one of the countries with the highest inflation in the region, such as the one recently carried out by some fellow economists and political leaders, it is unfortunate and could contribute to altering the expectations of economic agents about the future evolution of prices and affect their spending and investment decisions”, he explains.

In this regard, it indicates that for the recent behavior of inflation, the conventional methodology most used by international organizations, academics and financial analysts has been used to monitor this variable in the countries that have adopted an Inflation Target Scheme ( inflation targeting), as is the case in the Dominican Republic and most Latin American economies.

Reports that in the country for a decade the BCRD adopted the EMI with the technical support of the International Monetary Fund (IMF) and the advice of experts from the main central banks of the region, a scheme in which the fulfillment of the goal was established. based on the result of the interannual variation of the consumer price index (CPI), that is, in a twelve-month period.

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“The annualized inflation of the Dominican Republic is below the median, which means that more than half of the countries in the region (10 of the list of 18) currently register an annualized variation of the CPI higher than that of the Dominican Republic. ”. He cites Venezuela, with an inflation of 137.1%, Argentina (71.0%), Chile (13.1%), Costa Rica (11.5%), Nicaragua (11.5%), Paraguay (11.1%), Honduras (10.9%), Colombia ( 10.2%), Brazil (10.1%) and Uruguay (9.6%).

Of the seven countries with lower inflation than the domestic one, three are dollarized (Panama, Ecuador and El Salvador), so they would not be comparable since they do not follow an independent monetary policy scheme. In terms of accumulated inflation in January-July 2022, the country is in the same position with respect to Latin American peers.

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As can be seen, he adds, that when analyzing the behavior of the consumer price index in the last twelve months, it stands out that the Dominican Republic is not among the economies with the highest levels of inflation in Latin America. “In fact, it ranks among the three countries with the least deviation from the center of its target range of the group in the region that have adopted inflation targeting schemes,” he says.

Revealing fact
Likewise, a revealing fact that some political analysts have tried to ignore in their eagerness to undermine the efforts made to stabilize the behavior of domestic prices is that after Uruguay and Guatemala, the Dominican Republic is the country with the smallest deviation with respect to center of its inflation target range within all those that follow this monetary policy scheme in the region, says the BCRD.

As of July 2022, Chile exhibits inflation 4.4 times higher than its target, Peru 4.4 times higher than its target, Costa Rica 3.8 times higher than its target, Colombia 3.4 times higher than its target, Brazil 2.9 times higher than its target, Paraguay 2.8 times higher than its goal, Mexico 2.7 times higher than its goal, Honduras 2.7 times higher than its goal, Dominican Republic 2.4 times higher than its goal, Guatemala 2.1 times higher than its goal and Uruguay 1.9 times higher than its goal.

As can be seen, when analyzing the behavior of the consumer price index in the last twelve months, it stands out that the Dominican Republic is not among the economies with the highest levels of inflation in Latin America. In fact, it is located within the three countries with the least deviation from the center of its target range of the group in the region that have adopted inflation targeting schemes, indicates the BCRD in its statement sent yesterday.

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