Chicken, bananas and sugar, among the foods that increased in price in July

Santo Domingo.- The Central Bank of the Dominican Republic (BCRD) reports that the consumer price index (CPI) registered a monthly variation of 0.45 % in July 2023. With this result, inter-annual inflation measured from July 2022 to July 2023, stood at 3.95 %, below the central point of the target range of 4.0 %±1.0 % established in the monetary program, being the lowest rate verified since July 2020.

The report released by the monetary institution explains that the inter-annual core inflation maintains a downward trend, standing at 5.05 % in July 2023, presenting a reduction of 224 basis points compared to the maximum of 7.29 % registered in May 2022. This indicator allows extracting of clearer signals for the conduction of monetary policy because it excludes some items that normally do not respond to monetary or liquidity conditions in the economy, such as food with great variability in their prices, fuels, and services with regulated prices such as electricity tariffs, transportation, in addition to alcoholic beverages and tobacco.

The report highlights that subjacent inflation verified monthly variations of 0.20 %, 0.36 %, and 0.34 % in May, June, and July 2023, respectively, rates that when annualized are consistent with interannual 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 July 2023 showed that the groups of goods and services experienced variations consistent with keeping inflation slightly below the central point of the target range of the monetary program. In this sense, the group with the highest contribution to inflation was Food and Non-Alcoholic Beverages, with a variation of 1.08%. In addition, the Transport (0.41 %), Restaurants and Hotels (0.53 %), and Miscellaneous Goods and Services (0.33 %) groups also contributed to inflation. The Housing group registered a variation of -0.16 %, attenuating the result of the general CPI for July.

The 1.08 % growth in the price index of the Food and Non-Alcoholic Beverages group is mainly explained by the price increases observed in some goods such as fresh chicken (2.02 %), green bananas (3.43 %), tomatoes (17.39 %), sugar (5.81 %), peppers (10.50 %), onions (8.09 %), potatoes (7.92 %), rice (0.56 %), among others. On the contrary, other food goods presented decreases in their prices such as sour lemons (-21.90 %), avocados (-3.49 %) and pork (-0.95 %), partially mitigating the increase in the group’s index.

The Transportation group CPI reflected an increase of 0.41 % in July, mainly due to price increases in automobiles (1.76 %), airline tickets (12.66 %), and cab ground transportation services (0.80 %). In addition, as a result of the weekly adjustments made by the Ministry of Industry, Commerce and Mipymes (MICM), there were slight price adjustments in premium gasoline (0.05 %) and regular gasoline (0.04 %), as well as in diesel oil (0.02 %); while the price of liquefied petroleum gas (LPG) for vehicles decreased 2.22 %.

The report states that the variation of 0.53 % of the index of the Restaurants and Hotels group, third in contribution to the general CPI in July 2023, basically responds to the increases in the prices of the services of meals prepared outside the home as a dish of the day (0. 66 %), food service with accompaniment (0.38 %), chicken service (0.35 %), juice served outside the home (0.70 %), sandwich (0.44 %), empanada (0.47 %) and pizza (0.45 %). It is important to note that the increase in the price index observed in the food supply service is the result of price increases in the basic inputs for its preparation, which directly affect the consumer price of these food services.

The price index of the Miscellaneous Goods and Services group grew 0.33 % in July 2023, fundamentally due to higher prices in personal care services (0.53 %) and personal care items (0.31 %).

It also adds that the CPI of the Housing group registered a variation of -0.16 %, mainly explained by the reduction of 2.22 % in the price of liquefied petroleum gas (LPG) for domestic use, also contributing to the fall observed in kerosene (-9.16 %). Meanwhile, the housing rental service increased by 0.41 %.

Inflation of tradable and non-tradable goods

The monetary policy governing body explains that the CPI of tradable goods, those that can be exported and imported free of restrictions, grew 0.41 % in July. The index of non-tradable goods and services, those that by their nature can only be traded within the economy that produces them or are subject to measures that limit imports of them, varied by 0.50 %.

Inflation by geographical areas

The BCRD reports that the analysis of the CPI by geographic regions shows that the consumer price index of the Ozama region, which comprises the National District and Santo Domingo province varied by 0.46 %, the North region by 0.46 %, the East region by 0.34 %, and the South region 0.54 %. The higher variation verified in the CPI of the Southern region is explained by the higher incidence of the Food and Non-Alcoholic Beverages group in this geographic area. It is worth noting that the lower variation in the CPI of the Eastern region is because the price of housing rental services remained unchanged in July for this region, contrary to the other areas where an increase in this item was registered.

Inflation by quintiles

The report of the monetary entity adds that the behavior of the CPI by socioeconomic strata reveals that the lower income quintiles show growths of 0.48 % in quintile 1, 0.47 % in quintile 2, and 0.42 % in quintile 3. 42 % for quintile 3, explained to a greater extent by the price increases of the Food and Non-Alcoholic Beverages groups; while the indexes of the higher income quintiles (4 and 5), experienced increases of 0.43 % and 0.44 %, respectively, as a result of the combination of the price increases of food goods and the Transportation group.