Inflation

January 2018


Released on 6 April 2018 | Download the complete release | pdfIcon 224 KB


  Jan 18 Dec 17 Nov 17
Oct 17

Headline * 6.0 5.5 5.0 6.1
Domestic ^ 1.3 1.2 0.7 1.1
Imported ^ 4.7 4.3 4.3 5.0

* Year-ended growth
^ Percentage point contribution to year-ended growth

Higher commodity prices over the month

Inflation rose over the month by 1.0% as both domestic and imported commodity prices increased during the month. The local component of inflation was mainly driven by the seasonality of local food and a further rise in the price of kava-Tonga. The imported component was driven by the increase in food, fuel, and clothing prices. Both local and imported inflation contributed equal 0.5 percentage points to the monthly inflation.

Over the year, the headline inflation rose to 6.0%, higher than the annual headline inflation of 5.5% recorded last month and a 5.4% in January 2017. Key factors that helped to drive the annual inflation rate higher included the rise in global oil and food prices, and increases in the price of kava-Tonga.

The prices of a variety of imported goods rose over the month which led to a 0.9% rise in the monthly imported inflation. The price of fuel rose by 2.6%, both diesel and petrol increased by 3.1% and 2.7% respectively. Imported food rose by 0.7% driven by the prices of mayonnaise, butter block, beef, lamb flaps, and chicken pieces to name a few. Additionally, prices of school uniform such as boys khaki shorts and girls’ uniform dresses also rose throughout the month which coincided with the increased demand for uniform given the preparations for beginning of the academic year in January 2018. Other goods whose price rose over the month included house paint, household equipment, tobacco, and cosmetic & toiletries. However, stationary supplies and medical supplies had lower prices over the month.

The annual imported inflation rose to 8.2% contributing 4.7 percentage points to the overall headline inflation. This was higher than a 7.7% recorded in January 2017 and a 7.4% last month. The annual imported inflation continued to be driven by higher food, tobacco, and oil prices. Imported food was the largest contributor which rose by 9.6% contributed 2.8 percentage points to the overall headline inflation. The prices of all imported food categories rose, led by a 12.0% increase in the price of meat, fish & poultry. This was reflected in a 16.2% and 9.4% rise in the prices of lamb flaps and chicken pieces respectively. This was followed by a 13.9% increase in the prices of dairy products such as butter. Moreover, other food components also rose by 5.8% which included food such as sweets and sugary drinks reflecting the further increase in excise tax in July 2017.

The new excise and customs amendment order in July 2017 increased taxes on tobacco and alcohol further. Hence, this category rose by 19.4% reflected in a 24.9% rise in the price of Winfield blue tobacco. Additionally, the movements in world oil prices coincided with an 11.3% rise in the price of fuel. Diesel and petrol prices rose by 12.7% and 11.7% respectively, followed by a 16.5% increase in the price of fuel and power under the household operations group (e.g. kerosene and liquid petroleum gas). On the other hand, the price for stationery supplies, cosmetics and toiletries, and house maintenance goods declined over the year.

The monthly domestic inflation rose by 1.2%, attributed to the seasonality of local food, higher kava-Tonga and coral aggregate prices. Seasonality of local food resulted in 7.5% increase in prices of fruits and vegetables which included items such as tomatoes, peanuts, pineapples, carrot, and cucumber. The price of Kava-Tonga and local alcohol increased by 2.7% and 3.4% respectively. Additionally, coral aggregates price rose by 29.4%.

In year ended terms, domestic inflation rose by 2.9% and contributed 1.3 percentage point to the overall headline inflation. The prices of electricity and kava-Tonga were the major drivers of domestic inflation. The constant increase in oil prices coincided with a 9.7% rise in the electricity price. Kava-Tonga price increased over the year by 22.2%. Each of these category contributed 0.4 percentage points equally to the overall headline inflation. Housing goods and services’ prices increased by 21.7% which includes housing rent and coral aggregates.

On the outlook, the Reserve Bank anticipates the annual headline inflation rate to increase in the near term due to the expected rise in food and fuel prices. However, favourable movements in global oil and food prices may change this outlook. The continued shortage of supply in kava-Tonga compared to its high demand, is likely to impact the domestic inflation for some time and therefore contribute to the higher annual headline inflation. Additionally, the vulnerability of Tonga to natural disasters also poses a risk to the local food supply and consequently its prices and the inflation outlook.


Inflation Releases

Inflation Releases for 2018


pdfIcon January
Released on 6 April 2018 | 224 KB
   

2017


pdfIcon December
Released on 23 March 2018 | 263 KB
pdfIcon November
Released on 21 February 2018 | 258 KB

pdfIcon October
Released on 11 January 2018 | 223 KB
pdfIcon September
Released on 28 December 2017 | 274 KB

pdfIcon August
Released on 10 November 2017 | 282 KB
pdfIcon July
Released on 19 October 2017 | 273 KB

pdfIcon June
Released on 15 August 2017 | 223 KB
pdfIcon May
Released on 15 August 2017 | 267 KB

pdfIcon April
Released on 30 June 2017 | 271 KB
pdfIcon March
Released on 23 June 2017 | 264 KB

pdfIcon February
Released on 23 May 2017 | 274 KB
pdfIcon January
Released on 23 June 2017 | 294 KB

2016


pdfIcon December
Released on 23 May 2017 | 289 KB
pdfIcon November
Released on 8 May 2017 | 262 KB

pdfIcon October
Released on 13 April 2017 | 272 KB
pdfIcon September
Released on 16 November 2016 | 262 KB

pdfIcon August
Released on 5 October 2016 | 344 KB
pdfIcon July
Released on 1 September 2016 | 188 KB

pdfIcon June
Released on 1 September 2016 | 485 KB
pdfIcon May
Released on 25 July 2016 | 516 KB

pdfIcon April
Released on 30 June 2016 | 593 KB
pdfIcon March
Released on 23 May 2016 | 543 KB

pdfIcon February
Released on 27 April 2016 | 471 KB
pdfIcon January
Released on 7 April 2016 | 485 KB

2015


pdfIcon December
Released on 2 February 2016 | 466 KB
pdfIcon November
Released on 22 January 2015 | 467 KB

pdfIcon October
Released on 22 December 2015 | 424 KB
pdfIcon September
Released on 10 November 2015 | 338 KB

pdfIcon August
Released on 6 October 2015 | 428 KB
pdfIcon July
Released on 21 September 2015 | 424 KB

pdfIcon June
Released on 5 August 2015 | 451 KB
pdfIcon May
Released on 16 July 2015 | 453 KB

pdfIcon April
Released on 26 May 2015 | 449 KB
pdfIcon March
Released on 6 May 2015 | 446 KB

pdfIcon February
Released on 10 April 2015 | 446 KB
pdfIcon January
Released on 5 March 2015 | 209 KB

2014


pdfIcon December
Released on 10 February 2015 | 439 KB
pdfIcon November
Released on 7 January 2015 | 296 KB

pdfIcon October
Released on 17 December 2014 | 296 KB
pdfIcon September
Released on 17 November 2014 | 468 KB

pdfIcon August
Released on 9 October 2014 | 711 KB
pdfIcon July
Released on 28 August 2014 | 320 KB

pdfIcon June
Release on 28 July 2014 | 315 KB
pdfIcon May
Release on 1 July 2014 | 646 KB

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