Inflation to rise but temporary: CBS

The Central Bank of Samoa (CBS) has warned that inflation is expected to rise over the next year due to higher international oil prices, but says the increase is likely to be temporary. CBS Governor Maiava Atalina Ainuu-Enari said in a press statement that the CBS expects inflation to increase over the coming year, mainly because of higher oil prices internationally. “While we expect inflation to increase over the coming year due to higher oil prices internationally, we expect these increases to be temporary,” she said. “Our decision to maintain current policy settings is a balance between keeping prices stable for the people of Samoa with continued support for economic growth.” The comments follow a decision by the Central Bank Board of Directors to keep Samoa’s monetary policy unchanged after its meeting on Tuesday. According to CBS, inflation is forecast to rise from 1.0 per cent in May 2026 to 3.8 per cent by June 2027. That would place inflation slightly above the Bank’s medium-term target of 3.0 per cent. The Central Bank said the expected rise is mainly due to higher global oil prices linked to the conflict between the United States and Iran. However, CBS said current forecasts suggest the increase will be temporary, with inflation expected to fall below the 3.0 per cent target in the next financial year. The Bank said its decision to maintain the current monetary policy settings supports its goal of keeping inflation stable while managing the high level of cash available in the financial system. CBS said it would continue to use monetary policy tools, including open market operations, to maintain price stability and manage excess cash in the banking system. The Samoan economy is projected to grow by 2.7 per cent over the next financial year. The Central Bank said growth is expected to be supported by increased Government spending, as well as strong earnings from remittances and tourism. Foreign exchange reserves are also expected to remain at around SAT$1.7 billion. That is equivalent to 15.7 months of import cover and is above the Central Bank’s minimum target of four months. The Bank said the level of reserves provides Samoa with a strong buffer against external shocks. The Board also noted that Samoa’s banking system remains stable, well-capitalised and financially sound. The Bank said it would continue to monitor global developments, particularly ongoing tensions in the Middle East, which could continue to affect international commodity prices and inflation. “Our priority remains clear, maintaining low and stable inflation, preserving confidence in the financial system, and supporting sustainable economic growth for the people of Samoa,” Maiava said.