Global inflation affecting PNG


THE Bank of PNG (BPNG) says the increase in global inflation, attributed to increased activity and demand from large fiscal and monetary stimulus packages, has resulted in higher import prices and domestic inflation.
Acting governor Benny Popoitai, in BPNG’s quarterly economic bulletin for the September quarter 2021, said this was exacerbated by the current Russia-Ukraine war which had already put pressure on crude oil and food prices (wheat/grains and vegetable oil) and fertiliser given that both countries were the major producers.
“The increases have affected international prices of these commodities, and subsequently the prices of our imported goods,” he said.
“The increase in prices in Papua New Guinea is due to higher imported prices from our trading partners.
“In recent months, we have seen high prices of imported items, especially fuel prices increasing significantly.
“However, inflationary pressures from the domestic supply side normalised attributed to the easing of restrictions of the Covid-19 (Coronavirus) pandemic.
“The annual inflation outcome in the December quarter of 2021 was 5.7 per cent as released by the National Statistical Office following an increase of 4.3 per cent in the September quarter.”
Popoitai cautioned that the increase in inflation reflected higher imported inflation driven by high energy prices including crude oil prices and pandemic induced supply disruptions.
“The December quarter inflation outcome reflected price increases in education; alcoholic beverages; tobacco and betel nuts; transportation; food and non-alcoholic beverages; health, miscellaneous; housing; and, clothing and footwear expenditure groups of 20 per cent, 8.8 per cent, 7.7 per cent, 6.6 per cent, 5.2 per cent, 4.3 per cent, 2.1 per cent and 1.1 per cent, respectively,” he said.
“These more than offset declines of 3.5 per cent and 2.5 per cent in the restaurants and hotels and communication expenditure groups, respectively.”