Weak Kina driving inflation up

By PETER ESILA
CITY Pharmacy Limited chief executive officer Navin Raju says the weakening Kina is driving inflation up.
“We are seeing this firsthand with rising import costs, which translate to higher prices on store shelves,” he said.
“Foreign exchange shortages are making matters worse.
“The time lag between buying goods and securing the necessary foreign currency leads to additional exchange rate losses, which unfortunately cannot be recouped. This will continue for as the Kina depreciates.”
He said consumers should expect prices of goods and services to go up.
“In short, the combined effect of a weakening Kina and foreign exchange shortages make it more expensive for businesses to import goods, ultimately impacting consumers who will have to pay more for products,” Raju said.
“There are signs of a gradual economic recovery nationwide following a rough first quarter.
This upswing is likely fueled by a combination of positive developments, including rising cocoa prices in the Islands and the restarting of projects in the Highlands.
“But, on top of rising prices, if there are no wage increases to keep pace with inflation, consumers’ purchasing power weakens.
“This means that they can buy less with their earnings even if their nominal wages stay the same.”
Meanwhile, PNGX chairman David Lawrence said: “Depreciation may enhance the competitiveness of exports and potentially incentivise the development of local industries to substitute for the increased cost of imports.
“The overall impact on the economy and foreign investment will depend significantly on the government’s ability to implement effective economic policies and provide support for key sectors during the period of currency adjustment.
“The ability to attract and retain investment, particularly in new and expanding sectors, will be critical to reducing any adverse effects of the currency’s depreciation.”