Asian Development Bank Warns of Rising Inflation in Papua New Guinea
Marcel Schroder, the country economist for the Asian Development Bank (ADB), has projected an uptick in inflation for Papua New Guinea (PNG), estimating it to reach 4.8% next year due to mounting price pressures. This announcement was made during the launch of the bank’s Asian Development Outlook (ADO) report in Port Moresby.
Schroder highlighted that inflation is anticipated to hover around 4.5% this year, a significant increase from the 2.3% recorded last year. However, he noted a potential moderation in inflationary trends for the current year.
"The inflation rate is being influenced by exchange rate depreciation and the repercussions of civil unrest," Schroder explained. He further emphasized that PNG's inflationary pressures were primarily impacted by government education subsidies and the impending depreciation of the exchange rate set by the Bank of PNG.
"The costs of many consumer goods have surged, with prices of food and non-alcoholic beverages witnessing a seven per cent rise last year," Schroder remarked, underscoring the challenges faced by consumers amidst the economic turbulence.
Contrary to the regional trend, as per the ADO report, inflation in Asia and the Pacific is expected to decline to 3.2% this year and further to 3.0% next year. This projection aligns with anticipated easing of global price pressures and the continuation of tight monetary policies across all economies.
The ADB report also sheds light on the impact of rice prices on food inflation, particularly affecting import-reliant economies. Factors contributing to this phenomenon include crop losses due to adverse weather conditions, India's restrictions on rice exports, increased global shipping costs due to security concerns in the Red Sea, and drought affecting the Panama Canal.
As PNG grapples with inflationary challenges, stakeholders are urged to remain vigilant and implement measures to mitigate the adverse effects on consumers and the overall economy. The ADB continues to monitor the situation closely and stands ready to provide support to address emerging economic concerns in the region.
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