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Marginal Change in Inflationary Pressure According to October CPI

Marginal Change in Inflationary  Pressure According to October CPI
Shoran Devi
November 11
11:00 2017

nThis is an informative publication, sponsored by The Fiji Sun, Fiji Bureau of Statistics and HFC Bank. All views expressed or implied are purely of the Financial Markets Analyst at the HFC Bank, Shoran Devi.


Inflation is the general increase in the prices of goods and services.

Or in other words, it refers to a situation in which you find that it takes more units of a currency to buy the same level of goods and services you bought yesterday or a year before.

The Consumer Price Index, also known as the cost of living index, is used as an economic indicator and acts as a barometer of the present inflation rate. CPI statistics are important indicators of how the economy is performing.

Estimating CPI involves surveying people to identify what they purchase on regular basis.

This helps determine the basket of commonly used goods and services.

The CPI data is released every month and monitors the trend of inflation and changes in the purchasing power of our domestic currency.

It reflects the changes in the prices paid by urban consumers for a representative basket of goods and services.

Marginal changes were noted in the latest release of Consumer Price Index Data for the month of October.

There are 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.

For this measure, the average annual rate of inflation for the twelve months to October 2017 (i.e. comparing the average CPI for the 12 months to October 2016) stands at 3.6 percent.

The other measure compares the CPI in the current month with the CPI in the comparable month of the previous year, as such, the month-on- comparable-month inflation rate (compared to October 2016) stands at 2.6 percent.

Similarly, the All Items CPI for the month of October registered no change over September 2017 (116.8) and stands at 116.8.

Details of price changes between September and October 2017 by expenditure class are as follows:


Food and non-alcoholic beverages: reduced by 1.3 per cent

Lower prices were recorded for meat, fish and sea food, milk, cheese, eggs, oils, fats, fruits, vegetables and non-alcoholic beverages such as coffee, tea, cocoa, mineral water and soft drinks.


Alcoholic beverages, tobacco and narcotics: increased by 2.8 per cent

Higher prices were recorded for wine, tobacco and yaqona.


Clothing and footwear: reduced by 0.3 per cent

Lower prices were recorded for garments and other articles of clothing and clothing accessories.


Housing, water, electricity, gas and other fuel: reduced by 0.1 per cent

Lower prices were recorded for paints, gas and liquid fuels.


Furnishings, household equipment and routine household maintenance: reduced by 0.8 per cent

Lower prices were recorded for furniture and furnishings, major household appliances, small electric household appliances, major tools & equipment, small tools and miscellaneous accessories and non-durable household goods.


Health: increased by 0.1 per cent

Higher prices were recorded for pharmaceutical products.


Transport: reduced by 0.1 per cent

Lower prices were recorded for motor cars.

Expenditure classes where some price changes were recorded but the changes balanced out were:

nRecreation and culture

nMiscellaneous goods and services


No price changes were recorded in the Communication, Education and Restaurants and Hotels divisions.

Inflation hurts the buying power, if your income doesn’t increase or increases at a slower rate than general inflation.

It makes your borrowing cheaper if you have an existing loan facility at a fixed rate but not a good news for those on adjustable rate loans.

It makes long term savings less attractive and affects your retirement plan as your savings will buy less as time goes on.

Inflation has a negative effect on the balance of payment by dampening our export sales as other countries find our goods more expensive.

Also, with inflation rising and real wages remaining low, the standard of living is also likely to take a hit.

Increasing prices has many repercussions on the ultimate pockets of individuals as well as at a macroeconomic level and perhaps the reason why the CPI data is one of the highly sought data for market participants.

Inflation data is very closely monitored by the Reserve Bank of Fiji as one of the twin objectives of RBF’s conduct of monetary policy is to ensure price stability, represented by maintaining average inflation rate at around 3 percent.

In that regard, it is interesting to note that Inflation was at 2.6 per cent in October compared to 2.0 percent in September, but remained lower than the 4.7 per cent registered a year ago.

Inflation rate is forecasted to be at around 3.0 per cent by the year-end.




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