The Reserve Bank of Fiji (RBF) reported a significant decrease in annual headline inflation, which slowed to just 1.3 percent in December 2024, marking the lowest year-end rate since 2021. This decline can largely be attributed to the diminishing effects of a Value Added Tax (VAT) increase that was implemented in 2023. Inflation had reached 5.1 percent in December 2023, peaking at 7.1 percent in April 2024.

The RBF noted that the year-end inflation rate’s drop is especially encouraging due to the slowest rise in food prices seen in nearly four years. Additionally, the removal of a 3.0 percent fiscal duty on raw materials, effective from the current fiscal year, contributed to this overall decrease.

Fiji’s economic landscape appears to be flourishing as well, buoyed by a positive performance from the tourism sector. As of November 2024, Fiji welcomed 899,098 visitors, demonstrating a 6.2 percent rise compared to the same period in 2023, with many arrivals coming from Australia, New Zealand, and the United States.

Sectoral growth is also notable; electricity generation increased by 11.1 percent, with over half of that energy derived from renewable sources. Gold production saw an impressive growth rate of 38 percent, mainly thanks to greater output from the Tuvatu Gold mine. Although the timber industry faced challenges—particularly a 13 percent drop in mahogany production—mineral water production has been on the decline, also seeing a 13 percent decrease.

This economic picture fosters an optimistic outlook for Fiji’s potential stability and growth. The anticipated moderation in inflation rates coupled with robust tourism indicates a promising recovery trajectory. Moreover, with the fading impact of prior tax hikes, there is hope for a more favorable economic environment that will benefit both consumers and businesses in the coming years.

In summary, Fiji’s economy is exhibiting encouraging signs of resilience, as reflected in the sustained economic activity across various sectors and a significant reduction in inflation. This bodes well for the nation’s financial future and stability.