Inflation did not reach 5.4 percent as predicted last year and prices did not rise that much as a result of hiking the goods and services tax (GST) to eight percent, figures from the Statistics Bureau have shown.
According to the CPI report for December released by the Statistics Bureau, prices rose 0.3 percent during the month. In annual terms, from December the year before to December last year, inflation was 2.02 percent.
The figure is far below the 5.4 percent forecast by the central bank Maldives Monetary Authority (MMA) in its advice for the budget before the start of the year. It is also below the 3.3 percent estimated by the MMA after a mid-year review of the forecast.
After the review, the reason that the MMA said prices would fall during the last two quarters of the year was the decreasing oil prices in the global market and the decline in the price of other commodities as a result. Overall during the year, inflation rose the highest in March with four percent during the month.
With prices falling since then, inflation stood at 2.6 percent at the end of the third quarter in September. Inflation remained steady at the same rate for the next two months. Inflation was lowest during the year in December.
The highest price increases during the year were recorded for insurance and financial services. Prices rose eight percent in the sector. The next highest increases were recorded for food, restaurants and accommodation services.
The biggest fall in prices was recorded for telecommunications with a decline of 10.6 percent. It was the only sector where prices fell in annual terms. Prices rose in all other sectors. The main reason for the moderation of overall inflation was the steep decline in prices in the sector.
Inflation will stand at one percent this year, according to the budget paper presented by the Finance Ministry for the year. However, prices were predicted to rise 3.9 percent if blanket subsidies were discontinued and a targeted subsidies policy was implemented as proposed by the government.
The Finance Ministry expects the highest price increases since 2013 to occur this year.
