Fiji’s annual inflation rate has dipped to -3.8 percent in September, a slight decrease from -3.5 percent in August, as reported by the Reserve Bank of Fiji (RBF). This reduction is primarily due to falling prices in key areas such as food, transport, and cooking fuel. While there were increases in the costs of alcohol, tobacco, and dining, the overall decrease in consumer prices has fostered a stable inflation landscape.
In an effort to kindle ongoing economic growth by keeping borrowing costs low, the RBF has decided to maintain the overnight policy rate at 0.25 percent. Governor Ariff Ali highlighted the necessity of price stability alongside robust foreign reserves, which currently amount to $3.9 billion, adequate to cover over six months’ worth of imports.
Fiji’s economy demonstrates resilience, as the country is poised for a fourth consecutive year of growth. Tourist arrivals have shown a modest increase, reaching 735,154, primarily from visitors coming from the United States, Pacific Islands, Europe, and the UK. However, this growth is contrasted by a decline in tourists from Australia, New Zealand, and Asia.
Key industries, including timber and electricity production, have shown positive outcomes, although sectors like gold, sugar, and mineral water have encountered specific challenges that have impacted their output levels.
Domestic consumption remains robust, buoyed by rising incomes and a consistent flow of remittances. Indicators such as VAT collections, vehicle registrations, and electricity demand all point towards increasing consumer expenditure, suggesting a strong underlying economic foundation.
Investment activity is also on the rise, driven by new construction projects and lower material costs. The RBF’s August Business Expectations Survey indicated that the majority of local businesses anticipate stable circumstances over the next 6 to 12 months and are planning investments in machinery and infrastructure.
Private sector credit saw a notable increase of 9.6 percent in September, with liquidity levels stabilizing around $2.3 billion. Despite a hopeful outlook, Governor Ali warned that global uncertainties—including geopolitical tensions between the US and China, possible new tariffs, and the approaching cyclone season—could pose risks to Fiji’s economic future.
The RBF plans to closely monitor these developments and adapt its policies as necessary to ensure sustained economic growth and stability. This proactive approach offers a sense of optimism as Fiji navigates the challenges present in both local and global economic landscapes.