Dominican Republic: Inflation continues on downward trend
August 10, 2012
In July, consumer prices dropped 0.20% over the previous month, which contrasted the 0.21% increase seen in June. The reading was driven by decreases in prices for housing as well as for transport. As a result, annual headline inflation fell from 2.7% in June to 1.6% in July, which marks the lowest rate since October 2009. At the current level, inflation sits well below the Central Bank's target of 5.5% with a 1.0 percentage point tolerance margin set in the Monetary Policy Program for 2012. Building on the favourable inflation scenario, at its 31 July meeting the Central Bank cut the monetary policy rate by 50 basis points to 5.50% from 6.00%. The Central Bank does not see a pick-up in inflationary pressures in the medium term and expects that inflation will end the year below the lower part of the tolerance range around the target.
Author: Armando Ciccarelli, Head of Data Solutions