Fiji has reached a significant milestone in its inflation journey, as indicated in Westpac’s recent economic outlook. According to the report released in February, the year 2025 marked a turning point, reflecting a shift from sustained price pressures to a period of disinflation and even deflation for most of the year.
Starting the year with a headline inflation rate of 2.5 percent year-on-year, Fiji saw this drop below zero by February, indicating a trend that lasted for the majority of the year. The report notes that between August and October, inflation dipped to its lowest levels, recording figures between minus 3.5 and minus 3.4 percent before stabilizing at zero by December. The annual average inflation rate for 2025 was reported as 1.4 percent, primarily influenced by reduced prices in tradable goods rather than services.
Westpac highlighted significant reductions in specific categories, with food and non-alcoholic beverages decreasing by an average of 3.3 percent and transportation costs dropping by an average of 4.8 percent. These declines were attributed to lower import prices, improved global supply chain conditions, and reduced fuel-related costs compared to the inflation trends witnessed from 2022 to 2024.
By late 2025, the report observed that monthly price fluctuations had stabilized, signaling that the phase of imported disinflation had largely concluded. However, certain service-based categories continued to experience inflationary pressures. Notably, prices for alcoholic beverages and tobacco increased by 3.1 percent, prices for restaurants and hotels rose by 2.9 percent, and miscellaneous goods and services saw an increase of 5.6 percent. These increases were largely attributed to heightened demand from the tourism sector and price adjustments influenced by regulations and service costs.
As the new year commenced, January 2026 data revealed that while overall inflation remained negative at minus 2.5 percent year-on-year, certain components still exerted upward pressure on prices. The slow downward adjustment of prices in the alcoholic beverages category was particularly flagged by the report.
Looking forward, Westpac projected that households would continue to face cost pressures, particularly in areas where competition is limited, as the combination of tradables-driven disinflation and persistent inflation in specific services persists. Moreover, the outlook for fuel prices in early 2026 suggests stability due to decreased global refined oil production and a weaker US dollar, with expectations of gradual increases later in the year for lighter fuels.
Overall, Westpac’s forecasts indicate a likely inflation rise to 2.8 percent by the end of 2026, with an average of 1.4 percent, suggesting a nuanced economic environment where opportunities for growth, particularly in the tourism sector, may help offset certain inflationary pressures. The continued monitoring of these trends will be essential for households and businesses navigating the evolving economic landscape in Fiji.