By Francisca Anania
With Inflation on the rise for the last two years, having the people of Papua New Guinea understand where it stems from and why can be helpful.
Economics Expert Maholopa Laveil revealed the two main causes of the country’s inflation.Inflation means that your money may not be able to buy as much today as it could in the past; and these could be from an Increase in wages, Increase in the price of raw materials, Increase in taxes, Decline in productivity, or Increase in money supply.
PNG’s current inflation is said to be caused by two main global factors according to Economics Expert and Lecturer at UPNG Maholopa Laveil.
He said “that the second global cause was the Ukraine-Russian War that broke out on February 24, 2022; and Russia being the largest exporter of natural gas, paused its exports to other countries, including PNG causing trade sanctions to be set in place and fuel and diesel prices to skyrocket.”
With food and fuel prices being affected by global these global causes in PNG, a ripple effect on other areas of the economy is inevitable.
Mr. Laveil explained that the increase of food and fuel prices caused by these global factors will have a ripple effect on other areas of the economy.
“Core Inflation’s high rate of 5% this year and projected to 4.5% next year shows the actual goods that people consume in the country.”
He urges the people of the country to be expectant of inflation and its impact.
“There is a high chance that the value of the KINA will decrease against PNG’s foreign trading partners and this depreciation will see additional costs of imported goods and services being put on customers in the form of high prices.”
Mr. Laveil urges the government to look into ways to address this depreciation carefully to maintain a fair outcome for the country.
