Fiji’s annual inflation rate rose from 5.8 percent in May to 6.7 percent in June and is expected to stabilize around 4 to 5 percent by the end of the year.
The Reserve Bank of Fiji (RBF) attributed this increase to higher prices in sectors 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 ease starting this month as the effects of the VAT increase diminish.
RBF Governor and Chair Ariff Ali highlighted that Fiji’s economy has largely been driven by consumption activities supported by higher tourist demand, personal remittances, and improved disposable incomes resulting from the tight labor market conditions.
Ali mentioned that while investment activity is slow-paced, recent indicators suggest a gradual improvement.
Looking forward, Ali noted that initiatives announced in the 2024-25 National Budget are expected to boost economic activity.
Despite varied sectoral outcomes in June, the tourism sector maintained its positive momentum into its peak season.
Visitor arrivals in the first half of the year rose by 7 percent annually, reaching 447,155, with notable increases from New Zealand, the United States, China, Australia, and Pacific Island countries.
On the sectoral level, annual gains were observed in gold and electricity output, though timber and mineral water production remained subdued through June.
Ali stated that the financial sector continues to be conducive for growth, with low interest rates supporting private sector credit growth, which accelerated to 11.3 percent in June, the highest since July 2017.
As of last week, foreign reserves were at $3.5 billion, sufficient to cover 5.8 months of retained import of goods and services, and are expected to remain adequate in the medium term.
Ali concluded that, considering 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.