The National, Friday 31st May 2013
THE appreciation of the kina and government’s free tuition fee policy reduced inflation during the December quarter, Treasurer Don Polye says.
Polye said in Port Moresby on Wednesday that the government will continue to monitor the inflation and ensure there is price stability and economic growth maintained.
“Some of the important developments in the PNG economy during the year (2012) had a positive impact on the economy.
“These include the strengthening of the kina against major trading partners’ currencies and the introduction of the National Government’s free tuition fee policy.
“The appreciation of the kina coincided with the ramping up of the PNG LNG construction phase including increased exploration and development activity in the mining and petroleum sector.
“All these have translated into increased foreign investment in the country and this is understood to have increased the demand, hence strength of the kina,” he said.
Inflation in the local economy grew at 2.2% last year.
This outcome as low when compared to the outcomes of the past five years when inflation was at an average of above 5%.
Last year, headline inflation as measured by the consumer price index (CPI) increased by 0.8% in the December quarter to be 1.6% higher through-the-year to last December.
Last year’s quarterly inflation was largely driven by high betel nut prices (up 29.1%), high cigarette and tobacco prices (up 4.9%) and high fuel power costs (up 3.1%).
While the through-the-year inflation was driven by high prices of cigarettes and tobacco (up 20.6%), alcoholic drinks (up 9.7%), high prices of women’s clothing (up 3.8%), high prices of other clothing and footwear (up 2.8%), and high prices of men’s clothing (up 2.0%).
Similarly, motor vehicle charges increased (up 2.6%), alongside telephone and postal charges (up 6.5%).
Also during the December quarter, inflation increased in all major centres except Port Moresby.