Inflation passes 6 pc mark, to rise further: RBF

November 07, 2009 10:01:42 AM

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Inflation in Fiji rose to 6.3 percent in September, up from 5.1 percent in August, with Fiji’s Reserve Bank predicting a further increase in the prices of market items during the festive season towards the year-end inflation forecast of 9.5 percent.

The RBF’s economic review for the month of October said movements in fuel and commodity prices were expected to continue influencing import prices in the approaching months.

Cumulative to August, the merchandise trade deficit narrowed to $1.02 million, down from $1.306 million in the same period last year.

Domestic export earnings also fell in the first eight months of the year by 17.4 percent led by sugar, mineral water, timber, garments, coconut oil and flour, more than offsetting increases from exports of gold, fish, molasses, sweet biscuits, corned meat and other exports, the RBF said.

Consumption remained subdued during the review period, it said.

Cumulative to September, net Value Added Tax collections and new motor vehicle sales both fell on an annual basis.

Other partial indicators including new loans for consumption purposes and imports of consumption goods both fell in the year to August.

However, the RBF said remittances recorded a strong annual growth of 39 percent up to September and “may support consumption activity in the coming months”.

Although visitor arrivals cumulative to August fell by 13 percent over the year, tourism continues to remain the bright spot on the horizon.

Virgin Australia will replace its sister Virgin Blue group airline Pacific Blue on the Sydney-Nadi route from December, launching daily flights with bigger 777-300ER aircraft.

Further increases in inbound capacity in December from Air Pacific’s Nadi-Hong Kong service and Continental Micronesia’s Honolulu service via Guam is expected to support the recovery of the tourism industry further, said the RBF.

In other leading sectors, sugar production up to September was lower than a year ago owing to mill problems.

The European Union reduced its preferential sugar price by a further 22 percent on October 1, bringing the total price reduction since 2006 to 36 percent.

The mining industry, gaining some momentum from last year, saw a strong rise in exports, the RBF said.

“Favourable gold prices are a positive impetus for the gold industry,” it said.

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