Inflation

March 2017


Released on 23 June 2017 | Download the complete release | pdfIcon 264 KB


  Mar 17
Feb 17
Jan 17
Dec 16

Headline * 9.4 8.9 5.4 6.7
Domestic ^ 2.2 3.1 1.1 2.7
Imported ^ 7.2 5.8 4.3 4.0

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

Low inflation rates in March 2016 drove higher rates in 2017

The annual headline inflation edged higher in March 2017 by 9.4% compared to a 1.4% inflation rate in March 2016. This was due to the very low level of imported prices in March 2016, which recorded a negative 6.3%. The relatively small rise over the month in the imported inflation rate of 0.6% has arithmetically resulted in a high annual imported inflation rate of 13.2% in March 2017 contributing 7.2 percentage points to the headline inflation.

However, inflation over the month rose by 0.4% mainly driven by the rise in the prices of local and imported food such as butter, eggs, sugar, and flour. Other items which also rose over the month included tobacco, kerosene, and liquid petroleum gas.

The annual imported inflation rose by 13.2% driven by higher food and oil prices. Imported food was the largest contributor which rose by 16.7% contributing 4.4 percentage points to the overall headline inflation. All imported food categories rose, led by a 24.0% increase in prices of meat, fish & poultry followed by the prices of other food components such as sugar and flour rising by 14.6%. The prices of these imported food continued to reflect the excise taxes and custom duties imposed on various imported food in July 2016. This tax effect is also reflected in the 33.0% increase in price of Winfield blue tobacco. Additionally, the increase in world oil prices drove the price of fuel higher by 26.1%, diesel and petrol rose by 34% and 26% respectively. This was followed by a 9.2% increase in household operations fuel and power which comprised of kerosene and liquid petroleum gas. The price of house maintenance goods also increased by 2.9% for items such as paint and bricks.

Over the month, imported prices increased by 0.6% driven by the prices of tobacco, fuel, kerosene, and liquid petroleum gas. Food items such as sugar, butter, and mutton flaps also rose over the month.

Similarly, the domestic annual inflation rate rose by 4.9% accounting for 2.2 percentage points of the headline inflation. The local inflation was driven by the rise in electricity price, continued short supply of kava-Tonga, and volatile local food prices. Increases in oil prices drove the electricity price higher by 17.8% contributing 0.8 percentage points to the annual headline inflation. The price of kava-Tonga increased over the year by 63.1%, followed by a 2.4% increase in the prices of local food, and a 5.4% increase in the price of domestic alcohol.

Monthly domestic inflation rose by 0.1% at the end of March due mainly to the seasonality of local food particularly for fruits and vegetables, and dairy products.

On the outlook, the Reserve Bank expects the upward inflationary pressure to remain in the near term as world oil and food prices slowly rise, coupled with the impact of the excise tax which was introduced in July 2016. The continued shortage of supply in kava-Tonga compared to its high demand is likely to impact the domestic inflation for some time, therefore contribute to the annual headline inflation. The Reserve Bank anticipates the annual headline inflation rate to fall below the inflation reference rate of 5% per annum in 2017/18. However, movements in commodity and oil prices, and other temporary factors may pose a risk to this forecast. Additionally, the vulnerability of Tonga to natural disasters also poses a risk to the local food prices and consequently the inflation outlook.


Inflation Releases

Inflation Releases for 2017


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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