A dangerous spending pattern
The cost of living is the biggest issue facing the people of Fiji today. Fiji is not alone.
The cost of living crisis is a global problem that has its roots in the COVID years as production dropped and the cost of shipping rose.
This has hit the people badly because of rising unemployment and stagnation in incomes.
In Fiji where poverty was already at its historical peak, the impact of the rise in global prices has now led to widespread increases in all domestic items like cassava and dalo.
The global price increases are now being fully internalised. The consumers know that the price of everything is on the rise.
It is rare to find a product whose price has come down.
A country must measure the rate of the increase in prices.
The rate of the rise in prices is called inflation. It is simple to calculate the rate of increase of the price of one item. But we need to have a measure of the increase in all items.
To be able to measure the rate of increase of the prices of all items, the Fiji Bureau of Statistics need to compute an index which is called the Consumer Price Index (CPI).
To enable the Bureau to compute the rate of increase of the prices of all items, it has to assign weights to each item in the index.
These weights are determined by how much an average family spends its income on that product.
For instance, the more money the family spends on cassava, the higher is the weight of cassava in the CPI.
The spending patterns of household are obtained by the Bureau through a survey called the Household Income and Expenditure Surveys (HIES) which it usually undertakes every five years.
The weights of our CPI were based on the 2014 HIES.
The most recent HIES was completed in 2019/2020.
The Bureau has recently updated the weights of the CPI from the 2019 HIES.
This is a mechanical exercise. There is no policy content whatsoever.
The new weights simply reflect the change in our spending patterns since 2014.
The new weights reflect some disturbing trends in how we spend our money.
Below are some of these trends:
❏ There is an increase in our spending on alcohol, kava, and cigarettes while food has decreased. To me, it is disturbing that our spending priorities are skewed. In these tough times, I would expect families to be watching their spending wisely, they are increasing their spending on not only discretionary items but on those that are not good for health.
❏ Cigarettes are ranked 3rd in the weights just behind tertiary education and rent.
❏ Pounded kava is ranked 5th.
❏ The highest ranking food item is cassava at 6th.
❏ Fiji Gold beer is 15th and Fiji Bitter was not far behind at 19th. Even rum has made the top 30.
❏ The food items are way down the list.
How we spend our monies is an individual choice. But this ranking must ring a warning bell to our community leaders.
In my view, we must reverse this pattern of spending.
Alcohol contributes to family breakups, social tensions, genderbased violence, road deaths, poor work ethics, and mounting health bills.
The drinking of kava is the greatest cause of our low level of productivity and health issues.
These weights were based on a HIES taken before the COVID.
It will be interesting to see how the patterns have changed after COVID.
This expenditure pattern worsens our poverty.
We are contributing to our own problems.
Proper financial management at the personal or family level must be strengthened.
A possible solution is to increase awareness and education. It must start with the family. Let us work together to rebuild lost values and discipline.
I look forward to the Bureau’s update of the poverty level from the 2019/2020 HIES.