High cost of food items drive inflation to 3-year high
Inflation in Fiji hit its highest levels in three years impacted by Severe Tropical Cyclone Winston and its impact on the supply of market items.
Respondents to a survey conducted last month said the high cost of living was the most important issue in Fiji, fuelled by the high cost of food.
The Governor of the Reserve Bank of Fiji, Mr Barry Whiteside said inflationary pressures last year came from domestic supply side factors after the onslaught of natural disasters.
“Inflation going forward in the near term is expected to continue to be domestically driven with any major downside risks stemming from adverse weather conditions but also, any sharp increases in international oil and food prices,”
Details of price changes between December 2016 and January 2017 by expenditure are as follows:
FOOD AND NON-ALCOHOLIC BEVERAGES: +5.3%
Higher prices were recorded for milk, cheese & eggs, oils & fats, fruits, vegetables, confectioneries, food products n.e.c. and non-alcoholic beverages such as tea & milo and mineral water & soft drinks.
ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS: +3.3%
Higher prices were recorded for spirits, beer, tobacco and yaqona.
CLOTHING AND FOOTWEAR: 0.0%
Some price changes were recorded in this division but these balanced out.
HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS: +1.6%
Higher prices were recorded for town rates, labour for maintenance and repair of dwellings, sewage collection, gas, liquid fuels and solid fuels.
FURNISHINGS, HOUSEHOLD EQUIPMENT AND ROUTINE HOUSEHOLD MAINTENANCE: +0.9%
Higher prices were recorded for furniture & furnishings, household textiles, major household appliances, small electric household appliances, major tools and equipment, small tools & miscellaneous accessories, non-durable household goods and domestic & household services.
Lower prices were recorded for pharmaceutical products, dental services and paramedical services.
Higher prices were recorded for spare parts & accessories for personal transport equipment, fuels & lubricants, services for maintenance and repair of personal transport, passenger transport by air and passenger transport by sea.
Lower prices were recorded for telephone & telefax services.
RECREATION AND CULTURE: -0.2%
Lower prices were recorded for information processing equipment, recording media, equipment for sport, camping & open air recreation, books and newspapers.
No price changes were recorded in this division.
RESTAURANTS AND HOTELS: +1.5%
Higher prices were recorded for accommodation services.
MISCELLANEOUS GOODS AND SERVICES: -0.3%
Lower prices were recorded for jewellery, other personal effects and other services n.e.c.
What is inflation?
Inflation is defined as the rise in the overall level of prices of goods and services in an economy over time.
Causes of inflation
Prices that consumers pay for goods and services are influenced by the cost of producing or supplying them – that is the cost of input – such as wages, raw materials, utility bills, imports and rent.
Prices also reflect the demand for goods and services. For example, if demand for a good or service is high but its supply is low, prices will tend to rise. Therefore, prices reflect the interaction between the demand and supply of goods and services.
According to the Fiji Bureau of Statistics, there were two measures of inflation used in Fiji.
- One compares the average CPI over the past twelve months with the average CPI over the previous twelve months
- The other compares the CPI in the current month with the CPI in the comparable month of the previous year.