Industry and Commerce Minister Francisco Javier Garcia told reporters yesterday that he did not see any reason for commercial establishments not to lower their prices. He pointed out that inventory that had been purchased with dollars at the high end of this year’s roller coaster exchange rate were now exhausted and that his ministry would take steps to lower the cost of the basic necessities.
The minister also pointed out that fuel prices were substantially lower this week, with the subsidy on propane down from RD$800 million to RD$560 million. He added that there was excess supply and that the lineups for propane at the various distributors’ outlets were no longer evident.
According to the Listin Diario, the minister also announced a program to verify the quality of the fuels sold to consumers. A mark of certification will be placed in highly visible locations at the filling stations around the country. And if that was the carrot, the minister also unveiled a move to crack the whip a little harder, saying that his ministry was reviewing sanctions to be applied to those gasoline stations that do not meet the standards.
In a similar story in El Caribe today, the paper asks why do prices continue to defy gravity. El Caribe’s reporters write that prices are nearly as high as when the dollar was being exchanged at RD$50. For the past several weeks there has been a strong downward tendency in the exchange market and currently the US currency is trading at prices lower than RD$27 to one, representing a 34% decrease since 16 August. In spite of that, only September saw a decrease in the Consumer Price Index, falling 1.13%, in the face of a 32.61% inflation rate from December of 2003. This past week, everyone from the President Leonel Fernandez to the president of CONEP has called for a reduction in prices. Economist Miguel Ceara Hatton, a consultant to the UNDP, says that prices are influenced by very few individuals that control the supply chain of many important products. Ceara feels that the lower price of the dollar should have had a significant impact at the consumer level. Many imported consumer items, such as milk, should have seen their prices lowered by nearly 17.5% to correspond to reality. Economist Pavel Isa Contreras put it another way: “There are two basic reasons, one is that the businesses change their inventories and buy new merchandise with cheaper dollars, but this (new inventory) can take as much as two months (to reach the consumer) because of customs paperwork. (The second reason is) that we are in an oligopoly marketplace, where a handful of people control the prices.”
To read the article in full, please see http://www.elcaribe.com.do/articulo_multimedios.aspx…