Fiji has officially entered a period of deflation, with the annual headline inflation rate dropping to -3.8 percent in September, the lowest level in recent years.

According to the Reserve Bank of Fiji (RBF), the sharp fall in prices was mainly driven by budget measures introduced in August, which reduced the cost of essential goods and services, particularly food, non-alcoholic beverages, transport, and fuel.

RBF Governor and Board Chairman Ariff Ali confirmed that the central bank’s Overnight Policy Rate (OPR) remains unchanged at 0.25 percent, reflecting the bank’s commitment to supporting growth while ensuring price and financial stability.

“The RBF’s monetary policy objectives of ensuring price stability and maintaining an adequate level of foreign reserves remain intact,” Mr Ali said.

He added that the lower cost of living was partly offset by modest price increases in alcohol, tobacco, restaurant, and hotel categories.

Foreign reserves remain robust at $3.9 billion, sufficient to cover 6.1 months of retained imports, while the economy continues to show resilience with steady consumption, investment, and business confidence.

“Consumption activity remains buoyant, supported by higher incomes and inward remittances,” Mr Ali said.

“Businesses also expect conditions to remain stable over the next 6 to 12 months.”

However, he cautioned that global uncertainties — including trade tensions between the US and China, and potential disruptions from the upcoming cyclone season — could impact Fiji’s growth outlook.

“The RBF will continue to closely monitor both international and domestic developments and align monetary policy accordingly.”

The RBF said its accommodative stance has helped keep lending rates low, supporting private sector credit growth of 9.6 percent in September, with system liquidity steady at $2.3 billion.