Year-end inflation forecast revised upward to 5%
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.