Inflation: Out of Sync

A commercial bank has finally admitted what this masthead said all along about the true state of Fiji's consumer price index (CPI) inflation. ANZ said annual inflation was in the 18-21 per cent range last year, and was predicted to rise another 13 per cent in 2023.

In its quarterly October Insight report, ANZ said CPI rose 4.2 per cent year on year in 2022, and stayed below two per cent year on year for most of this year.

Update by December 

For two consecutive months, Fiji Sun sought comments from Fiji Bureau of Statistics, through personal visits to the Vatuwaqa head office in Suva, emails and telephone calls to its re-appointed chief executive officer Kemueli Naiqama.

On at least three occasions, he refused to front up to reporters from this newspaper. That was, until yesterday, when ANZ released a report outlining its concerns on Fiji’s outdated CPI inflation.

Mr Naiqama responded with an apology.

But an apology many weeks later holds no water when he and his office were well versed with the request Fiji Sun had made all the while.

Mr Naiqama said an update of the CPI weights were still based on household income and expenditure survey (HIES) from 2013/2014, and would be updated to 2019/2020 data, by the end of this year.

SunBiz reached out to Westpac, Reserve Bank of Fiji and the Association of Banks in Fiji (ABIF), for comments.

Westpac did not comment when this edition went to print, although it earlier issued its inflation estimates – which were questionable against the reality on the ground – and one which got the whole ball rolling on the matter.

Last week, the Reserve Bank of Fiji referred this newspaper to FBOA.

ABIF president Haroon Ali did not wish to comment.

ANZ sets it right 

ANZ said the official statistics understated true inflation.

“Aging product groups in the CPI are dragging the overall figure down,” ANZ said.

“And despite a re-emergence of wage inflation, services price rise appears to be low.

According to online economic indicator Trading Economics, Fiji’s inflation was 2.5 per cent, while food inflation was 8.5 per cent.

In recent weeks, the Asian Development Bank breezed in to announce a three per cent inflation rate for Fiji.

This, while the Fiji Bureau of Statistics quietly maintained – based on its 2014 CPI – that inflation was around a flattering 1.3 per cent, a figure that made Fiji appear as a Utopia of sorts to its more developed regional country members.

Retail trade Gross Value Added suggests a higher CPI for 2022 

In 2022, while the retail trade gross value added (GVA) grew by 7.2 per cent, expenditure on retail trade lifted by a significant 32.6 per cent, ANZ said.

“This is quite surprising as retail trade GVA is closely linked to consumer demand (spending) for retail goods,” ANZ said.

“Even allowing for a full-year of open borders, higher imports and tourism retail spending, the more than four-fold increase in expenditure appears too large and inconsistent with its historical relationship with retail trade GVA.

“We believe the growth in real or constant price retail trade expenditure is over stated due to an understatement of the CPI deflator.”

According to ANZ, a CPI deflator in the 18–21 per cent range versus 4.2 per cent would have resulted in a 15 per cent rise in retail trade expenditure, which was more consistent with retail trade GVA.

Feedback: frederica.elbourne@fijisun.com.fj