Fiji’s annual inflation rate saw a significant drop to 0.1 percent in May, down from 5.8 percent in the same month last year, according to the Reserve Bank of Fiji (RBF). This moderation in inflation is primarily attributed to reduced food and fuel prices, which partly counterbalanced the increases in the costs of kava and alcoholic beverages.
The RBF reported that foreign reserves are currently estimated at around $3.7 billion, providing enough coverage for 5.8 months of imported goods and services, with projections indicating this will remain adequate for the medium term. The bank has also opted to keep the Overnight Policy Rate stable at 0.25 percent following its recent meeting. RBF Governor Ariff Ali emphasized that the objectives of maintaining price stability and ensuring a healthy level of foreign reserves are effectively being met.
On the tourism front, there was a modest rise in visitor arrivals in May compared to the previous year; however, there was a 1.0 percent decline in total arrivals over the first five months of 2025, as drops from key markets like Australia and New Zealand outpaced gains from Pacific Island countries and the United States.
The overall performance of resource-based sectors is on an upward trajectory, although gold production has faced industry-specific challenges. Consumption across the economy remains robust, supported by rising incomes, remittances, and new lending by commercial banks.
Investment activity is gradually improving, albeit hampered by some regulatory hurdles and elevated business costs. Notably, conditions in the labor market have become less strained due to a decrease in resident departures and an influx of foreign workers.
Governor Ali also pointed out that the financial sector remains favorable for economic growth, with sufficient liquidity of $2.1 billion. The RBF will closely monitor ongoing global tensions, particularly those affecting fuel prices, alongside other domestic developments, to adjust monetary policy as necessary.
This positive trend suggests that despite some challenges, Fiji’s economy shows resilience and the potential for growth moving forward, especially within its key sectors like tourism and resource-based industries.
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