Data released by the Maldives Bureau of Statistics has revealed that while inflation was initially expected to be at 5.4 percent last year following the increase of Goods and Services Tax (GST) to 8 percent, prices did not rise as per projections.

The Consumer Price Index (CPI) for December, released by the bureau, showed prices rose 0.39 percent during December with inflation at 2.02 percent on a year-on-year basis; which was significantly lower than the 5.4 percent the Maldives Monetary Authority (MMA) had projected in its budget advice before the start of the year — it was also lower than the MMA’s revised mid-year forecast of 3.3 percent. Inflation was the lowest in December, data showed.

The MMA projected prices would fall in the last two quarters of the year due to lower global oil prices leading to reductions in other sectors.

Inflation reached its peak in March, when it stood at four percent. Prices have since fallen with inflation standing at 2.6 percent in the third quarter (Q3) in September, remaining stable over the next two months.

Insurance and financial services saw the biggest price increases throughout the year. Prices in the sector rose eight percent. The next biggest price increases were in food, restaurants and accommodation.

The biggest price drop was in the communications sector where prices fell 10.6 percent. Communications was the only sector in which year-on-year prices fell while prices in all other sectors remained high. The main reason for lower overall inflation overall was attributed to the drop in communications prices.

According to the Ministry of Finance budget report, inflation will remain at one percent this year. However, if the government proposes to abolish the blanket subsidy and implement the targeted subsidy policy, prices are expected to rise by 3.9 percent.

According to Ministry of Finance projections, 2024 will see the highest increase in prices since 2013.