Inflation to rise, says economist

THE Asian Development Bank’s (ADB) country economist Marcel Schroder says inflation in Papua New Guinea is expected to increase to 4.8 per cent next year due to price pressures.
He said yesterday during the bank’s Asian Development Outlook (ADO) report launching in Port Moresby that inflation should be around 4.5 per cent this year, from the 2.3 per cent last year.
“Inflation is expected to moderate this year,” he said.
Schroder said the inflation rate was being affected by the exchange rate depreciation and the impact of the civil unrest.
“PNG’s inflationary pressure was mostly affected by the Government education subsidiary as well as the Bank of PNG’s looming exchange rates depreciation to bring to the market,” he said.
“The costs for many consumer goods have increased, with prices of food and non-alcoholic beverages rising by seven per cent last year,” he said.
However, according to the ADO report, inflation in Asia and the Pacific was expected to decline to 3.2 per cent this year and 3.0 per cent next year when global price pressures ease and monetary policy remains tight in all economies.
The ADB also revealed in the report that prices of rice have contributed to higher food inflation, especially for import-reliant economies.
Prices for rice are likely to stay higher this year because of crop losses due to adverse weather and India’s restrictions on rice exports, increased global shipping costs due to attacks against ships in the red sea and drought in the Panama Canal.