Fiji has marked a notable achievement in its inflation journey, as detailed in Westpac’s latest economic outlook. The report, published in February, indicates a pivotal transition beginning in 2025, moving from a prolonged period of price pressures to an era of disinflation and even deflation for a significant part of the year.
Starting 2025 with a headline inflation rate of 2.5 percent year-on-year, Fiji’s inflation saw a remarkable decrease, falling below zero by February. This downward trend persisted for most of the year, with the lowest recorded inflation between August and October, at figures fluctuating between minus 3.5 and minus 3.4 percent, finally stabilizing at zero by December. The annual average inflation rate for the year was reported at 1.4 percent, largely influenced by lower prices in tradable goods as opposed to services.
Westpac noted substantial declines in key categories, with food and non-alcoholic beverages seeing an average decrease of 3.3 percent and transportation costs dropping by an average of 4.8 percent. These reductions were driven by lower import prices, enhanced global supply chain conditions, and decreased fuel costs, contrasting sharply with the inflation trends witnessed between 2022 and 2024.
As 2025 drew to a close, the report noted that fluctuations in monthly prices had stabilized, suggesting that the phase of imported disinflation was nearing its end. However, some service-based categories continued to face inflationary pressures. Notably, prices for alcoholic beverages and tobacco rose by 3.1 percent, restaurant and hotel prices saw a rise of 2.9 percent, and miscellaneous goods and services experienced an increase of 5.6 percent. These upticks were largely linked to increased demand from the tourism sector and regulatory-driven price adjustments.
Entering 2026, the data revealed that overall inflation remained negative at minus 2.5 percent year-on-year, yet certain components were still contributing to upward price pressures. The report specifically highlighted the slow downward adjustment in prices for alcoholic beverages.
Looking ahead, Westpac anticipates that households may continue to face cost pressures, particularly in sectors where competition is limited. Despite the disinflation driven by tradables, certain services will still experience inflation. The forecast for fuel prices in early 2026 suggests stability, attributed to reduced global refined oil production and a weaker US dollar, with expectations of gradual increases later in the year for lighter fuels.
Overall, Westpac projects that inflation might rise to 2.8 percent by the end of 2026, with an average anticipated rate of 1.4 percent. This points to a complex economic environment where the potential for growth, especially in tourism, may help mitigate some inflationary pressures. Ongoing monitoring of these trends will be crucial for households and businesses as they navigate Fiji’s evolving economic landscape.