The National, Thursday October 1st, 2015
PAPUA New Guinea’s annual inflation has eased progressively from 6.6 per cent in December of last year to 5.7 per cent in the June quarter of this year, according to the central bank.
Bank of Papua New Guinea Governor Loi Bakani said the outcome was predominantly due to increases in prices of foods, rent and excise items such as tobacco and alcohol.
“Although prices for imported food have eased over the year, fruit and vegetable prices rose, reflecting strong demand for housing, especially in Port Moresby and Lae,” Bakani said in the bank’s September monetary policy statement released this week. “However, there was some downward pressure from the transportation sector as the effect of weaker international oil prices fed through to the domestic prices.
“The fall in international food and oil prices, increased competition and cheaper imports more than offset the pass-through effects of the depreciation of the kina to domestic prices.
“The annual trimmed-mean and exclusion-based measures for underlying inflation were 3.5 per cent and 3.6 per cent, respectively, during the June quarter of 2015.”
Bakani said given the outcomes and projected inflation, and in-part to support economic activity, BPNG would maintain its projection of annual headline inflation at six per cent for this year while revising upwards the trimmed-mean and exclusion-based measures to four per cent and 4.5 per cent, respectively.
He said the projections were based on a lower growth outlook for the domestic economy, lower foreign inflation from major trading partners attributed to declines in international oil and food prices, and a low pass-through of kina depreciation to domestic prices.