Dominican Republic: Inflation eases further in February
March 10, 2018
Consumer prices fell 0.11% in February over the previous month, contrasting the 0.29% increase recorded in January. The figure was the first month-on-month drop since last May. According to the Central Bank, large declines in food and housing prices were behind February’s drop, which more than offset higher prices at the pump and incrased charges for alcohol and tobacco.
Inflation moderated to 3.3% in February from 3.9% in January. As a result, inflation approached the lower bound of the Central Bank’s inflation target range of 3.0%–5.0%. Conversely, core inflation, which excludes volatile items such as food and energy prices, picked up to 2.5% in February from 2.4% in January, the highest print in nearly three years.
At its 28 February monetary policy meeting, the Central Bank kept the main policy rate unchanged at 5.25%, where it has been since July 2017. The Bank justified its decision by highlighting that inflation expectations for the next two years remain firmly entrenched within its target range. The Bank also highlighted the economy’s robust performance in the last stretch of 2017, a performance that owed to loosened fiscal and monetary stances in the second half of the year.
Dominican Inflation Forecast
FocusEconomics Consensus Forecast participants expect inflation to end 2018 at 4.0%, which is up 0.1 percentage points from last month’s projection. In 2019, the panelists project inflation will increase to 4.2%.
Author: David Ampudia, Economist