Rising global fuel prices and supply risks are expected to drive inflation higher in Fiji in the coming months, the Reserve Bank of Fiji has warned in its March 2026 Economic Review released today.
The central bank said headline inflation stood at negative 0.5 per cent in February, improving from negative 2.5 per cent in January but still below the negative 0.3 per cent recorded a year earlier.
It noted that deflation has largely been driven by declines in transport, food and non-alcoholic beverages, and housing and utilities.
However, the outlook is shifting.
“Rising global fuel prices and continued supply-chain disruptions are expected to filter through to domestic prices pushing inflation higher in the coming months,” the report stated.
With global fuel supply risks remaining elevated, the RBF said its inflation outlook of 2.5 to 3.0 per cent is now “upward-biased”.
The bank also warned that higher fuel prices, combined with volatility in global shipping, could weaken Fiji’s external position and place pressure on foreign reserves.
Foreign reserves currently stand at around $3.5 billion, equivalent to five months of retained imports, and are considered adequate.
However, the RBF cautioned that continued volatility in fuel markets and freight costs could see pressure on reserves emerge sooner than expected.
Despite these risks, the central bank has maintained the Overnight Policy Rate at 0.25 per cent, saying current conditions remain within comfortable levels.
The RBF said it will continue to monitor developments closely and take necessary action if required to maintain macroeconomic stability.
