The Reserve Bank of Fiji (RBF) expects inflation to climb above 6 percent by the end of this year, driven by higher fuel costs, electricity price increases and the fading impact of last year’s VAT reduction.
In its latest Economic Review, the RBF said annual headline inflation, as measured by the Fiji Bureau of Statistics, rose to 3.9 percent in May from 1.8 percent in April, signalling the end of Fiji’s deflationary period.
The increase was largely driven by higher prices for alcoholic beverages, tobacco and narcotics, transport costs due to rising diesel and petrol prices, and food and non-alcoholic beverages.
The central bank expects inflationary pressures to intensify over the coming months as both the direct and indirect effects of the electricity surcharge continue to filter through the economy, alongside ongoing fuel price adjustments.
It also noted that the reduction in the VAT rate introduced in August 2025 will drop out of the annual comparison base during the second half of the year, pushing the headline inflation rate even higher.
“As such, year-end inflation is now projected to exceed 6.0 percent, a notable increase from the 2.5 percent anticipated before the start of the conflict,” the RBF said.
The central bank added that future inflation will depend largely on global oil price movements, particularly developments surrounding the Iran-US peace negotiations, which remain a key factor influencing international energy markets.
