Global inflation to impact PNG,8.7pc projected: Report

GLOBAL inflation has increased significantly in the first half of 2022 due to rising fuel and gas prices, and food grains reflecting the impact of the Russia-Ukraine war, according to the Bank of Papua New Guinea (BPNG).
The bank, in its quarterly economic bulletin for December quarter 2021, said this year, the International Monetary Fund (IMF) projected inflation to be around 5.7 per cent for advanced economies and 8.7 per cent for the emerging market and developing economies.
Acting governor Benny Popoitai said the Russia-Ukraine war had brought on significant disruptions to the global supply of energy and food resulting in high commodity prices and inflation rising to record levels.
He warned that developing economies like PNG would be adversely affected with high prices due to a lack of social safety net programmes and limited financial resources to minimise the impact, as economies were still recovering from the impact of the Coronavirus pandemic.
“Higher prices are expected to remain elevated as Russia continues to show no signs of ending the war in the near future,” Popoitai said.
He said in light of this, the Government had introduced temporary relief measures, including raising the income tax threshold and providing tax exemptions on essential refined fuel products to relieve consumers of higher fuel prices.
“According to the latest international commodity price data published by the World Bank in April, prices for all commodities continued to increase in the March quarter of 2022, compared to the December quarter of 2021,” he said.
“Energy prices increased by 17.8 per cent reflecting higher prices for natural gas, coal and crude oil due to the recovery from demand and supply constraints.
“This is further exacerbated by the Russia-Ukraine war, which adversely affected supplies of crude oil and gas, food grain, animal feed and fertilisers from these two countries.
“Non-energy prices also increased by 11.3 per cent with price increases in agriculture, beverages and food products.
“For non-mineral products, prices increased for coffee, cocoa and palm oil, while logs and tea declined.
“Prices of precious metals increased by 3.7 per cent, reflecting increases for gold, platinum and silver.
“As a result, prices of some of PNG’s export commodities continued to increase in the first quarter of 2022.”