Inflation in Fiji is expected to remain above six per cent until the end of the year, with rising food prices and the effects of El Niño continuing to put pressure on household spending.
Reserve Bank of Fiji (RBF) Governor and board chairman Ariff Ali said annual inflation stood at 6.8 per cent in September, down from 7.6 per cent in August but significantly higher than the negative 3.8 per cent recorded in September last year.
He said higher prices for food, fuel, kava and utilities continued to drive inflation.
“By year-end, inflation is expected to remain elevated and above 6.0 percent, reflecting persistently high global commodity prices and the effects of El Niño-related weather conditions, which are likely to increase domestic food prices, particularly for market items such as fruits and vegetables,” the RBF stated.
Despite the inflationary pressures, Mr Ali said Fiji’s economy continued to demonstrate resilience, supported by stronger tourism activity, consumer spending and improvements in investment and construction.
Visitor arrivals increased by 3.7 per cent in the year to September compared with the corresponding period last year, largely driven by visitors from Australia, the United States and Europe.
The RBF also recorded improvements in electricity generation, mining, mineral water production and sugar production.
Based on preliminary economic indicators, the central bank expects Fiji’s economic growth this year to exceed its earlier forecast of 1.5 per cent.
However, it warned that El Niño could pose significant risks to economic growth in 2027.
Mr Ali said foreign reserves stood at approximately $4 billion as of October 28, sufficient to cover 5.6 months of retained imports.
The reserves are supported by government external financing and tourism earnings and are expected to remain adequate over the medium term.
He said liquidity in the banking system remained high at approximately $2.1 billion, helping maintain low interest rates and support lending to businesses and households.
The Governor explained that the Bank’s monetary policy decision was aimed at supporting economic activity, maintaining adequate foreign reserves and managing inflationary pressures arising mainly from higher import costs.
He warned that global geopolitical tensions, inflation, social and security concerns and climate-related uncertainties continued to pose risks to Fiji’s economic outlook.
The RBF said it would continue monitoring domestic and international developments and take necessary action to maintain price stability and protect foreign reserves.
