A disaggregate approach to examining the prices, inflation and remittances relationship

This study examines how different sources of the inflows of remittance affect prices and inflation across 12 major categories and 44 basket items in Fiji from January 2018 to December 2021. We find that prices and remittances are cointegrated, and that there is short- and long-term inflationary effects that are weak. Both positive and negative short-run effects are more common when data are disaggregated. Our main contribution is that we have added to the literature by studying the inflation-remittance nexus at a very disaggregated level and by evaluating the role of the price regulator (Fijian Competition and Consumer Commission, FCCC) in influencing inflation. Direct effects are shown by FCCC's controls; however the moderating impact is minimal. This study highlights the importance for policymakers to maintain heightened awareness regarding the role of remittances and their utilisation within the economy.