Fiji’s economic landscape witnessed a dramatic shift in 2025 as the nation transitioned from a sustained period of inflation to a notable phase of deflation. Shamal Chand, a Westpac Pacific Economist, reported that at the beginning of 2025, Fiji’s headline inflation stood at 2.5%, but it fell below zero by February, staying negative for most of the year. The inflation rate reached its lowest between August and October, dropping to approximately -3.5% to -3.4%, and eventually stabilized around zero by December. The overall annual average inflation for 2025 concluded at 1.4%.
Chand attributes this significant decline in inflation primarily to the prices of tradable goods rather than services. Food and non-alcoholic beverages experienced an average price drop of 3.3%, while transportation costs saw a decline of about 4.8%. These reductions are largely due to decreased imported food prices, improvements in global supply chains, and slowed fuel-related price hikes compared to previous years (2022 to 2024).
By the end of 2025, monthly inflation measures indicated stability, suggesting that the cycle of imported disinflation was largely completed. However, certain sectors, particularly services, continued to face structural inflation pressures. For instance, while alcoholic beverages and tobacco rose by an average of 3.1%, costs in restaurants and hotels increased by 2.9%, with miscellaneous goods and services surging by 5.6%. These increases likely reflect strong demand from the tourism sector, market price adjustments, and expense levels within regulated services that adapt more slowly than commodity prices.
The Consumer Price Index (CPI) figures released in January 2026 reinforced this ongoing inflationary divergence, showing headline inflation at -2.5% year-on-year and -0.8% month-on-month, with an annual average of -1.8%. This overall downward trend, however, is contrasted by specific categories, particularly alcoholic beverages, which are experiencing upward pressure, indicating a slow adjustment process.
Chand highlights that while Fiji is undergoing broad disinflation driven by tradables, select services are likely to continue facing persistent inflation. Although headline inflation is expected to remain low, households may still grapple with increased costs in sectors where competition is limited and service delivery expenses are high.
As the year progresses, domestic fuel prices are projected to hold steady early on due to declining global refined production and a weakening US dollar, affecting diesel and kerosene prices. Prices for lighter fuels such as motor spirit and premix may rise starting in the second quarter but are expected to remain relatively stable amidst broader uncertainty. Chand projects that the inflation risks for 2026 lean towards an upward trend, forecasting a year-end inflation of 2.8% and an average inflation rate of 1.4% for the year.
This transformation in Fiji’s economic landscape indicates resilience amid changing global conditions, with a cautious optimism for the future despite certain persistent inflationary pressures. As the country continues to adapt, the outlook remains focused on managing costs while fostering economic growth.