PAPUA NEW GUINEA INFLATION SURGES ALMOST 22%, BETEL NUT A FACTOR

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PORT MORESBY, Papua New Guinea (February 18, 1999 - Post-Courier)---The price of goods and services throughout the country rose by almost 22 percent in 1998, National Statistician Nick Suvulo announced yesterday.

This is almost double the inflation rate of 11.5 percent predicted by the Government in the 1999 Budget.

The rise in the official inflation rate jumped substantially from the 14.5 percent rise recorded in the year to September 30. The 21.8 per cent rise during last year was the highest since 1995's 23.1 percent increase.

Releasing the consumer price index (CPI) data for December yesterday, Mr. Suvulo said in a statement that official inflation rose by 7.5 per cent for the three months to December 31.

This followed increases of 3.6 percent in March, 2.6 percent in June and 6.6 percent in September.

Mr. Suvulo said one of the major contributing factors to the huge increase in the level of inflation was the price hikes for betel nuts nationwide.

The Government made several different predictions on inflation levels throughout 1998. It began with Prime Minister Bill Skate's prediction at the National Economic Summit last October that the 9 percent growth in CPI recorded for the 12 months to June would be sustained throughout the year.

Then in November, Deputy Prime Minister and Treasurer Iairo Lasaro announced in the 1999 Budget that the Government was expecting an inflation rate of 11.5 percent over 1998.

Bank of PNG Governor Morea Vele warned of further difficulties and said the CPI might climb by 14 percent.

Mr. Suvulo said all urban centers throughout the country where CPI levels were monitored experienced price hikes between September and December.

He said the highest rise, 9.6 percent, was recorded in Port Moresby, followed by Rabaul with 8.1 percent, Goroka's 6.3 percent, Lae with 5.3 percent and Madang, which had the lowest increase at 3.9 percent.

The National Statistical Office (NSO) said high betel nut prices in Port Moresby and Rabaul contributed significantly to the high rises recorded in these two centers.

Mr. Suvulo said higher prices for meat and fish also contributed to the overall rises in the index.

The inflation level for Port Moresby alone for the 12 months to December was 23.7 percent, 1.9 percent higher than the national average.

Statistics supplied by the NSO showed the 21.8 percent recorded for the 12 months from December 1997 to December 1998 was the highest annual growth rate for any 12 month period since 1995.

PNG's annual inflation rate stood at 23.1 per cent over the year to September 30, 1995, during a period when PNG was undergoing a serious financial crisis. Significant price increases were recorded nationwide during the same period, with all centers except Madang (17.8 percent) recording increases of more than 20 percent.

Mr. Suvulo said that price increases were recorded in all food groups, except for fruit and vegetable groups, which fell in all centers but Goroka.

For additional reports from The Post-Courier, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Post-Courier (Papua New Guinea).

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