Fiji’s economic landscape underwent a significant transformation in 2025 as the country shifted from a prolonged period of inflation to notable deflation. According to Westpac Pacific Economist Shamal Chand, Fiji’s headline inflation began the year at 2.5% but quickly dipped below zero by February, remaining negative for the majority of the year. The lowest points were recorded between August and October, where inflation reached around -3.5% to -3.4%, before stabilizing back to zero by December. Overall, the annual average inflation rate for 2025 settled at 1.4%.
Chand attributes the decline in inflation primarily to tradable goods rather than services. Notably, food and non-alcoholic beverages saw an average drop of 3.3%, while transportation costs decreased by an average of 4.8%. These reductions can be linked to a decrease in imported food prices, improvements in global supply chains, and less fuel-related price increases compared to the years 2022 to 2024.
By the end of 2025, the monthly inflation measures demonstrated stability, indicating that the cycle of imported disinflation was largely completed. However, some areas still experienced structural inflation pressures, particularly within the service sector. Alcoholic beverages and tobacco rose by an annual average of 3.1%, while costs in restaurants and hotels increased by 2.9%, and miscellaneous goods and services surged by 5.6%. These trends are often reflective of heightened demand from tourism, price adjustments due to market margins, and costs within regulated services which do not adapt as swiftly as commodity prices.
The January 2026 Consumer Price Index (CPI) figures emphasize this ongoing inflationary divergence, showing headline inflation at -2.5% year-on-year and -0.8% month-on-month, with an annual average at -1.8%. Despite this overall downward trend, specific categories, particularly alcoholic beverages, are still under upward pressure, suggesting a slow adjustment process.
Chand notes that Fiji is experiencing a broad disinflation driven by tradables, while select services continue to face persistent inflation. Although headline inflation is likely to remain low, households may still encounter higher costs in areas with limited competition and elevated service delivery expenses.
Looking forward, domestic fuel prices are expected to stay firm in the early part of this year due to decreased global refined production and a weakening US dollar, especially affecting diesel and kerosene prices. Lighter fuels like motor spirit and premix may see increases starting in the second quarter but are anticipated to remain relatively contained amidst a wider backdrop of uncertainty. Chand also indicates that inflation risks for 2026 skew upward, projecting a year-end inflation of 2.8% and an average inflation of 1.4% for the year.