Dominican Republic: Inflation moderates in May

In May, consumer prices increased 0.25% over the previous month, which contrasted the 0.09% decrease observed in April and marked the highest reading since October 2015. According to the Central Bank, the increase mainly reflected higher prices for transport and housing.

Inflation decreased slightly from 1.8% in April to 1.7% in May. Annual average inflation inched up from April’s 1.2% to 1.4% in May. Headline inflation is well below the lower bound of the Central Bank’s tolerance margin of plus/minus 1.0 percentage point around its 4.0% target rate.

At its meeting on 31 May, the Central Bank decided to maintain its monetary policy rate at 5.00%, taking into consideration the inflation outlook as well as the recent developments of the most important macroeconomic indicators, chiefly the good performance in April’s monthly indicator for economic activity (IMAE, Indice Mensual de Actividad Economica).

FocusEconomics Consensus Forecast participants expect inflation to end 2016 at 2.6%, which is down 0.2 percentage points over last month’s projection. Panelists project inflation of 3.3% in 2017.