The Central Bank (BCRD) assures that the impact of the rise in the oil price and some inputs and commodities is temporary on the country’s inflation. Remember that the rise in food prices is due to the prices of raw materials in international markets.
Governor Héctor Valdez Albizu argues that the price increases are the result of external factors and says the good news is that the oil price will cost $ 5 less for December, a trend that will continue in 2022 with a decline of $ 10.
It is clear that, despite an international environment that is still uncertain due to the pandemic, variations in domestic prices in countries such as ours are explained by factors of external origin and are transient, with prices needing to converge to their equilibrium. level in the global context, ”he said.
Likewise, the Governor of the BCRD states in a document that “although annual inflation was 5.55% as of December 2020 and monthly inflation for January and February of this year was 0.97% and 0.68% respectively, it is expected that inflation will converge in the policy horizon towards the objective of the monetary program and will be around 4% once the above-mentioned temporary effects are exceeded ”.
Valdez Albizu’s considerations are in the document: Incidence in local oil and food price inflation in international markets. Perspectives of the Dominican Economy.
It indicates that the document that both Valdez Albizu, and more recently President Luis Abinader and other officials of the government’s economic team, have publicly expressed their belief that the price increase originates in international markets and responds to completely temporary factors and circumstances that should gradually disappear as the pandemic abates, production continues its gradual recovery and accelerates the arrival of tourists to the country as part of an effective vaccination campaign.
External factors
Prices of Dominican base basket products have seen recent increases due to external factors, notably the price increases in world markets of sorghum, wheat, corn and soybeans, among others, he says.
The prices of sorghum, soybeans and corn saw remarkable increases in the past year of 98.0%, 61.7% and 44.1%. For wheat, the increase has been 23.5% over the past 12 months.
KNOWING MORE
Monetary measures
Comprehensive policy
Regarding the policy to follow, Valdeez Albizu confirms that the main governors and supervisors at the international level are focused on addressing the health crisis and its impact on economic activity, for which fiscal and monetary expansion measures are expected to continue, apart from the emerging pressure on domestic prices, “which, as explained, are considered to be temporary in nature”.
Petroleum
The biggest impact on domestic prices is the international oil price.