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April CPI Notes Marginal Changes in Inflation Rate

The Consumer Price Index is a comprehensive measure used to estimate the change in the prices of a basket of goods and services representing con­sumption expenditure of an econ­omy. The
19 May 2018 11:00
April CPI Notes Marginal Changes in Inflation Rate
Shoran Devi

The Consumer Price Index is a comprehensive measure used to estimate the change in the prices of a basket of goods and services representing con­sumption expenditure of an econ­omy.

The percentage change in this in­dex over a period of time gives the rate of inflation over that specific period.

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

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 a year before.

In the recent release by the Fiji Bureau of Statistics, changes were noted in the Consumer Price Index for the month of April.

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.

In that regard, the average an­nual rate of inflation for the twelve months to April 2018 (that is com­paring the average CPI for the 12 months to April 2018 with the aver­age for the twelve months to April 2017) stands at 2.4 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 April 2017) stands at 4.0 per cent.

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 April 2017) stands at 4.0 percent.

Similarly, the All Items CPI for the month of April registered an increase of 1.7 per cent over March 2018 (119.4) and stands at 121.4.

Price changes

Details of price changes between March 2018 and April 2018 by ex­penditure class are as follows:

nFood and non-alcoholic bever­ages increased by 5.5per cent.

Higher prices were recorded for bread and cereals, meat, fish and sea food, milk, cheese and eggs, oils and fats, vegetables, sugar, jam, honey, chocolate and confectionery and food products n.e.c.

nAlcoholic beverages, tobacco and nar­cot­ics in­creased by 1.4 percent. Higher pric­es were recorded for spirits, beer and yaqona.

nTransport increased by 0.3 per cent.Higher prices were recorded for fuels.

nMiscellaneous goods and servic­es increased by 0.1per cent. Higher prices were recorded for other ap­pliances, articles and products for personal care.

nHousing, water, electricity, gas and other fuels decreased by 0.8 per cent. Lower prices were recorded for gas.

nFurnishings, household equip­ment and routine household main­tenance decreased by 0.3 per cent. Lower prices were recorded for furniture and furnishings, major household appliances whether elec­tric or not, small electric household appliance and non-durable house­hold goods.

nHealth reduced by 0.6 per cent.

Lower prices were recorded for pharmaceutical products.

No price changes were noted in communication, recreation and culture, education and restaurants and hotels expenditure classes.

Inflation 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.

Inflationary pressures in the first four months of the year were driv­en by both domestic and external factors.

Higher global crude oil prices were passed onto domestic fuel prices in January and April this year as part of the quarterly fuel price reviews carried out by the Fijian Competi­tion and Consumer Commission.

In addition, Tropical Cyclones Jo­sie andKeni and flooding in early April led to an increase in prices of agricultural market items such as vegetables and local fruits.

While we anticipate agricultural product prices to stabilise as sup­ply normalises, prices for yaqona may continue to remain high due to damages sustained by the farms in Kadavu.

With the prices expected to nor­malise in the coming months, the RBF expects inflation to be around 3.0 per cent by year-end.

For 2019 and 2020, inflation is fore­cast to be around 2.5 per cent, in the absence of any major shocks.

However, increasing global com­modity prices (particularly crude oil and food) pose some risks to the above forecasts.

The RBF will continue to monitor price developments in the coming months and review inflation fore­casts accordingly.

Feedback: maraia.vula@fijisun.com.fj



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