Inflation is the general increase in prices of goods and services in an economy. It indicates the rate of change in prices over some period – such as one year – though other periods can be used.
Like most central banks, one of the monetary policy objectives of the Reserve Bank of Fiji (RBF) is to maintain price stability (low inflation). Low inflation is important as it preserves the buying power of money, thus protecting peoples’ savings. It also assists businesses in making sound investment decisions. Low inflation is therefore an important precondition for promoting sustainable economic growth.
There are various types of inflation. The rate at which your money loses value depends on the type of inflation prevalent. These include low, moderate, galloping and hyperinflation.
Low inflation is normally characterised by inflation rates between 1-5 percent, while moderate inflation ranges between 5-30 percent. On the other hand, galloping inflation occurs when prices increase at double or triple digits higher than 30 percent.