Year-end in­fla­tion fore­cast re­vised up­ward to 5%

Fiji Sun - - Business - RACHNA LAL Feed­back: ra­nobab@fi­

The Re­serve Bank of Fiji has re­vised the 2016 year-end head­line in­fla­tion fore­cast up­ward to five per cent from the 3.5 per cent ex­pected ear­lier. This was based on the fact that in­fla­tion re­mained above the five per cent mar­ket for five con­sec­u­tive months since May. The rea­son for this was at­trib­uted largely on ac­count of cy­clone-re­lated ef­fects on the do­mes­tic sup­ply of agri­cul­tural pro­duce – es­pe­cially yaqona.

In­fla­tion fell to 5.6 per cent in Septem­ber, from a high of 5.9 per cent in Au­gust. This has been high­lighted in the cen­tral bank’s Oc­to­ber Eco­nomic Re­view re­leased yes­ter­day.

In­fla­tion can be sim­ply de­fined as the rate at which the gen­eral level of prices for goods and ser­vices is ris­ing and, con­se­quently, the pur­chas­ing power of cur­rency is fall­ing. The RBF noted that con­tri­bu­tions to the Septem­ber 2016 in­fla­tion out­turn were higher prices mainly in the al­co­holic bev­er­ages, to­bacco & nar­cotics – par­tic­u­larly yaqona; food & non-al­co­holic bev­er­ages and ed­u­ca­tion cat­e­gories. “High yaqona prices have per­sisted and un­ex­pect­edly grew fur­ther in Septem­ber,” it said.

“If prices re­main at sim­i­lar lev­els, there is a higher like­li­hood of con­tin­ued in­fla­tion­ary pres­sure to­wards the end of 2016.

“Con­se­quently, the 2016 year-end head­line in­fla­tion fore­cast has been re­vised up­ward to five per cent, from the 3.5 per cent ex­pected ear­lier.” Ex­clud­ing the im­pact from higher prices of volatile items such as food, yaqona and en­ergy, un­der­ly­ing in­fla­tion for Septem­ber was around 3.3 per cent.

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