Reserve Bank of Fiji Governor and Board Chairman Ariff Ali says inflation is expected to continue rising in the coming months, largely due to external pressures beyond Fiji’s control, particularly higher global fuel prices linked to the ongoing conflict in the Middle East.
In its Overnight Policy Rate release, Mr Ali said the international situation was already impacting domestic prices, including transport and electricity costs.
“Inflation is expected to continue to rise in the near term, mainly due to external factors beyond Fiji’s control, particularly higher global fuel prices linked to the ongoing conflict in the Middle East,” he said.
“These pressures are already feeding into domestic prices including transport and electricity costs.”
Recent economic data show headline inflation rose to 1.8 percent in April, ending more than a year of deflation. The increase was largely driven by higher prices for fuel, food and kava.
Core inflation also increased to 1.7 percent, with higher kava prices being a major contributing factor.
Mr Ali said the extent of future price increases would largely depend on how long the conflict lasts and how severe it becomes.
“The extent of these price pressures will depend on how long the conflict lasts and how severe it becomes,” he said.
Despite inflationary pressures, Mr Ali said economic activity in Fiji continues to be supported by strong remittance inflows and tourism activity.
However, he warned there are early signs that the pace of economic growth may be starting to slow.
“Economic activity continues to be supported by inflow of remittances and tourism activity, although there are early signs that overall economic growth is beginning to moderate,” he said.
The Reserve Bank is expected to continue monitoring global developments closely as geopolitical tensions and rising commodity prices create uncertainty for small island economies like Fiji.
