The Consumer Price Index (CPI) experienced a decline in October compared to the previous year, primarily influenced by lower prices in the food and non-alcoholic beverages sectors, as well as in alcoholic beverages, tobacco, and narcotics. This reduction contributed to an annual headline inflation rate of 3.6 percent for October, down from four percent a year prior and a decrease from 4.2 percent recorded in September 2024. This analysis comes from the Reserve Bank of Fiji’s (RBF) November Economic Review published last week.
Looking ahead, the RBF projects that by the end of this year, headline inflation will hover around 3.5 percent, a significant reduction from the 5.1 percent recorded in December 2023. This expected drop is attributed to moderated prices in the categories of food and non-alcoholic beverages, transportation, and housing and utilities.
Interestingly, this easing of inflation occurs alongside robust tourism activity, increased remittances, and wage growth, all of which have been fueling local consumer spending. The total wages disbursed grew by 11.6 percent in the year leading up to September, largely due to strategies employed by employers to retain staff and mitigate workforce shortages. In tandem, Pay As You Earn (PAYE) tax collections exhibited a substantial increase of 25.8 percent by October, reflecting the rise in total wages.
Consumption activity has remained steady, bolstered by the positive impacts of thriving tourism, improving incomes, continued remittances, and expanded government expenditure. This trend is further supported by indicators such as a 34.6 percent growth in net Value Added Tax (VAT) collections, a 19.8 percent increase in total vehicle registrations, and a significant 33.9 percent rise in new credit extended for consumption purposes, all reflecting impressive annual gains through October.
As a result of this positive economic landscape leading into October, the Macroeconomic Committee, under the leadership of RBF Governor Arif Ali, has upwardly revised Fiji’s economic growth forecast to 3.8 percent from the previous estimate of 2.8 percent in June.
In summary, while inflation decreases are a hopeful indication of economic stabilization, Fiji’s economic indicators depict a favorable outlook, suggesting strength in consumption and income growth. This positive trend signals resilience in the economy, supported by tourism and remittances, setting a hopeful tone for continued recovery and growth.
Overall, the current economic environment in Fiji is promising, signaling progress in several key sectors while providing a foundation for sustainable growth in the future.
Leave a comment