Inflation has emerged as a “key pressure point for Fiji”, threatening to erode gains from otherwise resilient domestic activity.
Westpac Bank senior economist Shamal Chand made the comment in the latest Westpac Wave Fiji Economic Update report released this week.
The update highlighted headline inflation accelerated to 6.8 per cent year-on-year in September, driven heavily by essentials: food prices rose 7.6 per cent year-on-year, transport increased 12.2 per cent year-on-year, and housing and utilities were 4.9 per cent higher.
Mr Chand warned the acceleration suggested the global fuel shock was increasingly working its way through the domestic economy.
He said the import-price pipeline reinforced that trend.
Import prices increased 4.9 per cent quarter-on-quarter and 4.4 per cent year-on-year in the June quarter, which included a 15.4 per cent year-on-year rise in mineral-product prices as petrol, diesel and aviation-fuel costs increased.
He said elevated energy costs were also spreading beyond the pump.
He said transport-services producer prices increased 2.7 per cent in June quarter, while building-material prices rose 1.5 per cent in September quarter, signalling broader pressure across distribution, construction and services.
Locally, he said fuel-price pressures intensified again this month, with regulated unleaded prices in Viti Levu increasing to $3.15/litre and diesel rising by 21 cents to $3.41/litre.
“Our indicative estimates point to further increases in fuel prices over the coming months.”
Mr Chand said the global outlook offered little immediate relief.
He said for Fiji, the distinction between crude and refined-product prices was important.
“Singapore gasoil prices, freight and insurance costs are expected to remain elevated and ease only gradually through 2027, meaning lower Brent prices may not translate immediately into cheaper imported fuel.
“Higher diesel costs feed into freight, construction, agriculture and distribution, while aviation fuel pressures add to airline operating costs and tourism sector margins.
“Repeated shocks increase the likelihood that businesses eventually pass more of these costs on to consumers, particularly through food and other essentials.”
Mr Chand said they expected inflation to remain elevated through year-end, rising towards 8.0 per cent in November before easing to 7.4 per cent in December, taking annual-average inflation to around 4.3 per cent.
“The concern is increasingly that an imported fuel shock develops into broader cost-push inflation into next year.
“The squeeze on real purchasing power makes inflation an increasingly important downside risk to Fiji’s growth outlook heading into 2027.”
