The Reserve Bank of Fiji (RBF) has warned that a recent rise in global fuel prices is likely to push inflation higher and dampen economic activity in the near term, marking an upward revision in the outlook for the year ahead. The central bank said the trend threatens to lift living costs for households and increase operating expenses for businesses across multiple sectors.
RBF highlighted that fuel and gas make up 6.9 percent of the average Fijian household budget — roughly seven cents of every dollar spent — leaving families vulnerable to swings in international oil and liquefied petroleum gas markets. As world prices climb, households can expect higher transport bills and rising utility costs, the bank said, which would erode real incomes and could weigh on domestic consumption.
The central bank warned the inflationary effect will ripple through the economy because fuel is a key input for transport, manufacturing, agriculture and retail. Higher fuel costs typically translate into bigger freight and operating expenses for firms, which are often passed on to consumers in the form of higher prices for goods and services. RBF said higher input costs are expected to raise production expenses and dampen demand, potentially slowing overall economic activity.
The bank pointed to a precedent in 2022, when global crude oil prices hovered above US$100 per barrel and annual headline inflation in Fiji averaged 6.1 percent. Earlier this year, RBF’s baseline expectation had been for inflation to end the year between 2.5 and 3.0 percent; that projection has now shifted upward in light of the latest fuel market volatility, though the bank has not published a new specific year‑end figure alongside its warning.
RBF also cautioned that continued volatility in global fuel markets and rising geopolitical tensions — notably those affecting supply in the Middle East — could hit tourism and travel costs. The central bank said increases in airfares and weaker travel demand could moderate visitor arrivals if conditions persist, compounding pressure on growth. The RBF assessed the balance of risks to Fiji’s outlook as tilted to the downside, with elevated oil prices likely to place upward pressure on inflation, constrain economic expansion and exert downward pressure on foreign reserves.
The warning echoes earlier concerns from the Fijian Competition and Consumer Commission, which has noted Fiji imports all of its fuel and faces a rapid domestic transmission of international price swings. For households and businesses already confronting higher costs, the RBF’s latest assessment signals a need to factor a more inflationary environment into financial and operational planning as global uncertainty continues.
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