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The Bank of PNG (BPNG) claims that rising global inflation has resulted in higher import costs and domestic inflation, which it attributes to increased activity and demand as a result of massive fiscal and monetary stimulus programs.
The ongoing Russia-Ukraine war, according to Acting Governor Benny Popoitai in BPNG's quarterly economic bulletin for the September quarter of 2021, has already put pressure on crude oil, and food prices (wheat/grains and vegetable oil), and fertilizer prices because both nations were key 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 increase significantly.
“However, inflationary pressures from the domestic supply-side normalized 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 percent as released by the National Statistical Office following an increase of 4.3 percent 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 percent, 8.8 percent, 7.7 percent, 6.6 percent, 5.2 percent, 4.3 percent, 2.1 percent, and 1.1 percent, respectively,” he said.
“These more than offset declines of 3.5 percent and 2.5 percent in the restaurants and hotels and communication expenditure groups, respectively.”
Reference: The National (1 May 2022). “Global inflation affecting PNG”.
