Dominican Republic: Inflation drops to over five-year low and records flat reading in April
May 11, 2015
In April, consumer prices fell 0.25% over the previous month, which contrasted the 0.14% increase observed in March. According to the Central Bank, the decrease mainly reflected lower prices for food and non-alcoholic beverages.
Headline inflation fell from 0.6% in March to a flat reading in April, which marked the lowest reading since October 2009. Annual average inflation edged down from 2.5% in March to 2.2% in April and now sits at its lowest rate in over five years. As a result, headline inflation remains well below the lower bound of the Central Bank’s tolerance margin of plus/minus 1.0 percentage points around its 4.0% target rate.
At its meeting on 30 April, the Central Bank decided to reduce its monetary policy rate by 0.5 percentage points from 5.75% to 5.25%. This was the a second consecutive meeting in which the Bank decided to cut its monetary policy rate, taking into consideration subdued inflationary pressures on the domestic front and the latest economic developments in the developed economies.
Author: Dirina Mançellari, Senior Economist