BPNG predicts headline inflation to be around 4pc


THE Bank of PNG (BPNG) predicts that headline inflation this year will be around 4 per cent – a decrease from 5.1 per cent in December last year.
Headline inflation is the raw inflation figure reported through the consumer price index .
BPNG governor Loi Bakani said the country’s inflation rose from 2.9 percent in 2019 to 5.1 percent in December, 2020.
“This was because of the impact of the Coronavirus (Covid-19) pandemic with rising prices for seasonal products as the supply chain of some of this products went up and prices in medical services also increased,” he said.
“We are lucky at the moment because inflation is not that high.”
However, he said the rates did not reflect the reality people faced every day.
“This statistical indicator of what the movement of prices are over time, (and) does not tell you the real prices on the shelves, the markets, service feesl,” Bakani said.
“They are totally two different things.”
He said the Government continued to face these fiscal challenges as a result of low revenue collection in 2020, while expenditure increased, compared to 2019.
Bakani said economic recovery this year was due to the easing of lockdown measures, fiscal stimulus in major economies, vaccine rollouts in the second half of 2020 and new ways of doing business.
But uncertainties remain with the emergence of new Covid-19 variant, the rising death toll, progress with vaccine rollouts and effectiveness of various policy measures, he said.
He warned businesses and individuals not to let their guards down.