Reserve Bank of Fiji. [File Photo]

Growth in the annual inflation rate softened to 0.1 percent in May from the 5.8 percent registered a year ago.

The Reserve Bank of Fiji says the softening is mostly driven by comparatively lower food and fuel prices which slightly offset the higher prices for kava and alcoholic beverages.

Foreign reserves are around $3.7 billion , sufficient to cover 5.8 months of retained imports of goods and services and are projected to remain adequate in the medium term.

The Governor and Chairman of the Board, Ariff Ali. [File Photo]

The Board has maintained the Overnight Policy Rate at 0.25 percent, after its meeting today.

The Governor and Chairman of the Board, Ariff Ali, states that the RBF’s monetary policy objectives of maintaining price stability and ensuring an adequate level of foreign reserves continue to be effectively met.

On the domestic front, visitor arrivals grew in May compared to the same month a year ago.

However, in the first five months of 2025, total visitor arrivals noted an annual contraction of 1.0 percent as travellers from Fiji’s key source markets such as Australia and New Zealand declined, more than offsetting the increase from the Pacific Island countries and the United States.

The performance of resource-based sectors continues to improve except for gold production which has been impacted by industry specific challenges.

Monitored indicators show strong consumption activity supported by higher income, inward remittances and new lending by commercial banks for consumption purposes.

Investment activity notes a gradual improvement but continues to be weighed down by elevated costs of doing business and regulatory hurdles.

Furthermore, the tight labour market conditions experienced in recent years have eased, mitigated by lower resident departures and increased intake of foreign workers.

Ali adds the financial sector remains conducive to economic growth with ample system liquidity of $2.1 billion.

The Bank will continue to monitor the evolving tensions in the Middle East and its impact on global fuel prices as well as other domestic and global developments, aligning monetary policy accordingly.

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