Fiji’s annual inflation rate increased from 5.8 percent in May to 6.7 percent in June and is projected to stabilize around 4 to 5 percent by the end of the year.
The Reserve Bank of Fiji attributes this rise to higher costs in categories such as food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, transport, housing utilities, and restaurants.
In a statement, the RBF noted that inflation is anticipated to moderate starting this month as the effects of the VAT increase diminish.
RBF Governor and Chair Ariff Ali stated that the Fijian economy has primarily been driven by consumption, supported by increased tourist demand, personal remittances, and higher disposable incomes resulting from the current tight labor market conditions.
According to Ali, investment activity is progressing slowly but recent indicators suggest gradual improvement.
Moving forward, he said initiatives announced in the fiscal year 2024-25 National Budget are expected to stimulate economic activity.
Ali noted that while sectoral outcomes varied in June, the tourism sector continued its positive momentum into the peak season.
Visitor arrivals in the first half of the year increased annually by 7 percent to 447,155 visitors, driven by more tourists from New Zealand, the United States, China, Australia, and Pacific Island Countries.
In terms of sectoral performance, annual gains were recorded for gold and electricity output, however, timber and mineral water production remained subdued as of June.
Ali highlighted that the financial sector remains supportive of growth, with low interest rates bolstering private sector credit growth, which rose to 11.3 percent in June, the highest since July 2017.
As of last week, foreign reserves stood at $3.5 billion, enough to cover 5.8 months of retained imports of goods and services, and are expected to remain adequate in the medium term.
Ali concluded by stating that after assessing current economic conditions and risks, the medium-term outlook for inflation and foreign reserves is stable. The current monetary policy setting will be maintained to support economic growth.