Inflation rate up
1 May, 2017, 12:00 am
FIJI’s inflation rate increased to 5.6 per cent in March from 5.5 per cent in February 2017, the Reserve Bank of Fiji has reported.
The inflation rate eased to 5.5 per cent in February after it had peaked to a high 6.8 per cent earlier in January.
In the RBF Economic Review for month of April released last week, the central bank stated that inflation was driven by higher prices in alcoholic beverages, tobacco & narcotics; furnishings, household, equipment & routine household maintenance; food & non-alcoholic beverages; restaurants & hotels; and clothing & footwear categories.
RBF also highlighted that the high price influences had more than offset the price declines in the housing, water, electricity, gas & other fuels; miscellaneous goods & services and communication categories compared with March 2016.
The temporary effects of the price hikes post Tropical Cyclone Winston, the central bank added are expected to taper off around April and the inflation rate is expected to decline and stabilise around 3.0 per cent by year-end.
Inflation is the rate at which the general level of prices for goods and services rise and consequently the purchasing power of a currency falls.
This means as inflation rises, it decreases the amount of goods that your money can buy and decreases its purchasing power.
Fiji’s last highest level of inflation was in October 2011 when it was recorded at 7.7 per cent.
From 2012 until the beginning of 2016, inflation was fairly subdued at lower margins but spiked after Severe TC Winston to a high 5.9 per cent in August last year.
The severe supply shortage in market items after TC Winston, in particular kava and bananas, was a contributing factor to the rise in inflation then including price increases for cigarettes and alcohol after the 2016/2017 National Budget announcement.
Meanwhile, Fiji’s foreign reserves rose marginally to $1,977.5m in March from $1,973.8m in February, sufficient to cover 5.3 months of retained imports of goods and non-factor services (MORI).
According to the economic review, foreign reserves reached a new record of $2,060.2m (5.5 MORI) on April 26, surpassing the previous high of $2,042.2m in 2015.