Fiji experienced a clear turning point in its inflation cycle in 2025, shifting from prolonged price pressures to broad disinflation and periods of deflation, according to Westpac.
In its February Westpac Wave: Fiji Economic Update and Outlook, the bank said headline inflation started 2025 at 2.5 per cent year-on-year but fell below zero from February and remained negative for most of the year.
“Headline inflation reached its lowest point between August and October, at around minus 3.5 to minus 3.4 per cent, before returning to zero by December,” the report said.
Westpac noted that the annual average inflation rate for 2025 stood at 1.4 per cent, with weakness largely driven by tradable goods rather than services.
“Food and non-alcoholic beverages declined by an average of 3.3 per cent in 2025, while the transport category fell by an average of 4.8 per cent,” the bank said.
“These declines reflected lower imported food prices, improved global supply chain conditions and less fuel-related pass-through compared with the 2022 to 2024 period.”
By late 2025, monthly price movements had stabilised, indicating that “the imported disinflation cycle was largely complete,” Westpac said.
However, the report highlighted persistent inflationary pressures in some service-based categories.
“Alcoholic beverages and tobacco rose by 3.1 per cent on an annual average basis, restaurants and hotels increased by 2.9 per cent, and miscellaneous goods and services climbed by a significant 5.6 per cent,” it said.
Westpac said these categories typically reflected “stronger demand from tourist activity, margin adjustments, regulated or excise-influenced prices, and service-based costs that do not adjust as quickly as commodity-driven components”.
January 2026 consumer price index figures underscored this divergence. While headline inflation remained negative at minus 2.5 per cent year-on-year, with an annual average of minus 1.8 per cent, “several key components continue to exert upward pressure beneath the surface”.
“Alcoholic beverages remain slow to adjust downward,” the report said.
Westpac said Fiji was now experiencing “broad tradables-driven disinflation alongside persistent inflation in select service and regulated categories”, warning that households would continue to face cost pressures in areas where competition was limited.
Looking ahead, the bank said domestic fuel prices were expected to remain firm in the first quarter of 2026 due to reduced global refined production and a weaker US dollar, particularly affecting diesel and kerosene.
“Lighter fuels such as motor spirit and premix are expected to start rising from the second quarter, but should remain mostly contained,” Westpac said, adding that the overall balance of inflation risks for 2026 appeared “tilted to the upside”.
Westpac forecasts year-end inflation of 2.8 per cent for 2026, with average inflation projected at 1.4 per cent.
