RBF states that Fiji’s economic outlook remains fragile amid ongoing global energy uncertainty.[Photo: Litia Cava]
Rising global energy costs remain the key concern highlighted in the Reserve Bank of Fiji May Economic Review.
The report warns that higher fuel prices are already feeding into domestic inflation and could continue to lift the cost of living in Fiji.
The report says continued tensions between the United States and Iran have kept global oil prices high, with Brent crude reaching $US114.01 a barrel in April before easing slightly this month.
It warns that even with progress in negotiations, uncertainty in global supply remains and could quickly push fuel prices higher again.
This matters for Fiji because higher fuel costs are already feeding into domestic inflation. Annual inflation turned positive to 1.8 per cent last month after a long period of deflation, driven mainly by fuel, food and transport costs.
The RBF also warns that recent increases in electricity tariffs and fuel prices could add further pressure in the months ahead.
Fijians should also watch for rising living costs, particularly in basic goods and services. The FAO Food Price Index rose for a third consecutive month, reflecting higher global prices for food items such as vegetable oils, meat and cereals.
At home, higher kava prices and imported food costs are adding to household pressure. Another key risk is weaker household spending power. Consumption lending has fallen, and retail growth expectations for 2026 have slowed compared with earlier forecasts
The report says higher fuel costs and electricity bills are likely to reduce disposable income and discretionary spending.
Jobs and income stability are also areas of concern. Job advertisements have dropped sharply, while outward migration and labour movement have increased.
This points to tighter hiring conditions and ongoing skills shortages in key sectors. At the same time, Fiji’s trade deficit has widened as imports grow faster than exports, raising pressure on foreign exchange earnings over time.
While foreign reserves remain adequate at 3.4 billion dollars, the RBF warns they could come under pressure if global fuel and freight costs stay elevated. Investment activity is one of the few bright spots, with strong lending growth in construction and real estate.
However, the bank notes that uncertainty around energy costs, regulations and project delays could slow future momentum.
The Reserve Bank has kept its policy rate at 0.25 per cent, saying it will continue to monitor inflation, reserves and global developments closely to maintain stability.
