Inflation rate increases 10.88 percent during 2012

Statistics from the Department of National Planning have indicated that inflation in the Maldives rose by 10.88 percent during 2012, according to local media reports.

Department director General Mariyam Niyaf explained the increase was the result of prices in commodities changing.

Local newspaper Haveeru has reported that the statistics indicated the cost of fish has increased by 50.77 percent nationwide, while food and beverage catering had risen by 10.85 percent over the twelve month period.

“All assessments show that the prices are rising. We believe that the main reason for it could be the rise in price of vegetables to 8.8 percent. Fish prices are also up 2.8 percent, Haveeru quoted Niyaf as saying.

Meanwhile, statistics indicate the inflation rate for furniture, household items, air transportation, as well as tools and equipment have slightly decreased.

In August 2012, an increased inflation rate was attributed to changes in the dollar, currently pegged to the rufiyaa within a 20 percent range of MVR 12.85.

In real terms, the rate has remained fixed at the maximum limit of MVR 15.42 and remains non-exchangeable, forcing importers to rely on inconsistent black market dollar exchanges of up to MVR 17-18.

In April 2011, then-Finance Minister Ahmed Inaz explained that the government decided to change the fixed exchange rate to a “managed float” to shape government policy towards increasing the value of the rufiyaa and ultimately bring the exchange rate down to MVR 10 – an oft-repeated pledge of former President Mohamed Nasheed.

The worsening balance of payments deficit could not be plugged without allowing the market to set the exchange rate, Inaz said at the time, adding that through lowering the fiscal deficit and spurring private sector job growth, “a path would open up for us to reach the lower band (MVR 10.28).”