Dominican Republic Inflation

Dominican Republic

Dominican Republic: Inflation soars to highest level in almost three years

July 30, 2011

In June, consumer prices added 1.02% over the previous month. Higher prices for housing (+2.97% month-on-month) as well as for food and non-alcoholic beverages (+1.34% mom) were the main drivers behind the monthly reading. The increase in housing prices reflected an 8.02% increase in the June electricity bill adopted by the Electricity Superintendence (SIE, Superintendencia de Electricidad) as a consequence of the continued pick-up in oil prices. That said, the June reading was above the 0.22% rise recorded in May and contrasted with the 0.16% drop recorded in June 2010. Accordingly, annual headline inflation jumped from 8.0% in May to 9.3% in June, the highest level since October 2008. At the current level, inflation sits well above the upper limit of the 5.0%-6.0% target range set by the Central Bank for 2011 for a seventh consecutive month. Despite the continued increase in inflation, at its 29 July meeting, the Bank decided to keep the monetary policy rate unchanged at 6.75%. The Central Bank has now refrained from raising interest rates for the second month in a row, after two consecutive hikes in May and June.

Author:, Head of Data Solutions

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