The Reserve Bank of Fiji (RBF) has said inflation has continued to ease, with the annual rate falling to -0.6 percent in June from 0.1 percent in May, and a sharp contrast to the 6.7 percent recorded in June last year.
This is stated in a RBF statement released yesterday.
“The decline in inflation is largely attributed to lower prices for food and non-alcoholic beverages, transport, and housing and utilities,” said RBF Governor, Ariff Ali.
He added that taxation measures introduced in the 2025-2026 National Budget are expected to exert additional downward pressure on consumer prices from August.
Despite the current trend, the Governor warned that inflationary risks still loom due to ongoing global uncertainties.
“Geopolitical tensions in the Middle East could disrupt global commodity prices and increase freight costs, which may pose upside risks to our inflation outlook,” he cautioned.
On the domestic front, the Bank noted mostly positive developments. The cane crushing season has started well, with higher cane and sugar output recorded in the first six weeks compared to the same period last year, although volumes remain below historical norms.
“Our resource-based sectors such as mahogany, sawn timber, woodchip, and mineral water production have performed better in the first half of the year,” Mr Ali said.
Tourism data was mixed, with a 0.8 percent annual drop in visitor arrivals to June. However, June alone saw a slight year-on-year increase of 0.1 percent, marking the third consecutive month of improvement.
“We’ve seen a pick-up in visitors from New Zealand and the United States, although numbers from Australia—our largest market—continue to fall,” he noted.
The Governor said signs of strong consumption persisted.
“Increases in VAT collections, new consumption loans, and vehicle registrations point to ongoing strength in consumer spending, underpinned by rising incomes and stable remittance inflows,” he said.
However, he acknowledged that investment and construction indicators show only slow-paced recovery.
“The high cost of doing business and regulatory bottlenecks continue to weigh on momentum,” he said, adding that labour market conditions appear to be easing.
The RBF also reaffirmed that the financial sector remains supportive of growth.
“Liquidity in the banking system stood at $2.2 billion as of 30 July, and the current low interest rate environment continues to support private sector credit,” Mr Ali said.
While the domestic outlook is broadly positive, the Governor said global challenges must not be ignored.
“Persistent uncertainty on the global economic and trade front could impact our recovery,” he said. “We will continue to monitor developments and adjust policy settings as necessary.”
The central bank’s next review is expected in late August.
