Limitation not unique to Fiji

The zero per cent inflation reported by the Reserve Bank of Fiji is correct, says Matt Myers, a senior valuation expert and educator with extensive experience in Fiji’s property sector.

Central banks the world over use the same standard measure, he said.

However, a common critique of headline consumer price index in any country was that it may not fully capture the experience of lower income households who allocate a larger share of their budget to essentials like food, he said.

“Wealthier households benefit more from falling prices on fuel, imported goods, and discretionary items,” Mr Myers said.

“When fuel drops 10 per cent and food rises five per cent, these can cancel out in the aggregate figure.

“Both figures can be accurate while describing different economic realities for different segments of the population,” he said.

The reality was not a limitation unique to Fiji or the RBF methodology, rather a well recognised feature of aggregate inflation statistics worldwide, Mr Myers said.

Headline inflation measured changes in price across hundreds of items weighted by typical house-hold spending.

Value Added Tax

SunBiz also received commentary from businesses that did not wish to be named.

“Those who suggest that prices fell because value added tax was re-duced, have to review that position, one contributor said. “In 2023, when VAT was raised from nine per cent to 15 per cent, inflation came in at 2.4 per cent,” an observer said.

In 2022 when VAT was nione per cent, inflation was 4.3 per cent.

“With a higher rate of VAT, price inflation slowed,” a spokesman said.

“How can a 2.5 per cent reduction in VAT make that much of difference.”