Inflation forecast to reach 5 per cent
THE Reserve Bank of Fiji forecasts headline inflation to reach 5.0 per cent by the end of this year from the 4.5 per cent earlier projected, before moderating to 3.1 per cent in 2023 and 2.4 per cent in 2024.
In its April economic review the RBF noted an increase of 4.7 per cent in inflation in March, up to 1.9 per cent in February, mainly because of rising food, fuel and other related goods.
Meanwhile imported inflation contributed 3.0pp to headline inflation in March, as volatile global developments, as well as the transmission of rising international commodity prices, continue to have an effect on domestic prices.
The review also noted an annual 7.8 per cent increase in food prices in March which was one of the major driving forces of overall inflation.
In its review report the RBF also noted that as an import-dependent nation, increasing import payments because of soaring global commodity prices and a resurgence in local demand would result in considerable outflows of foreign reserves, more so with the expected continual rise in fuel and food prices.
However at this stage, the bank projects foreign reserves to remain comfortable in the near term, boosted by the rebound in tourism and related activities, stronger inward remittances, and Government loan drawdowns.
Foreign reserves stood at $3.1 billion as of April 29, enough to sustain 8.5 months of retained imports.
Meanwhile on a positive note, the review showed that inward personal remittances increased by 5.7 per cent to $205.4 million in the year to March, of which $63.0m was received via mobile network operators.
The increasing demand for Fiji’s labour under the seasonal worker schemes is expected to augur well for inward remittances going forward.