The inflation rate is expected to reach 10% in the coming months.
Inflation currently stands at 6.9%, down from 5.7% in the last quarter of 2021, according to official figures released by the Bank of Papua New Guinea.
It means life is going to get a whole lot tougher in the coming months for people as they slowly emerge from the worst general election ever and head into one of the worst droughts the country has ever seen.
What is Inflation? It is the rate of increase in the prices of goods and services over a given period of time.
Inflation is generally a broad measure used by economists, banks or governments for that matter, to describe the overall increase in prices or the increase in the cost of living in a country.
The current cost of living in PNG, apparently increasing daily, is influenced by various external factors such as the cost of imports and the shortage of foreign currency in the money market.
The government is well aware of the drivers and is pleased that it is taking steps to alleviate the hardships the people are facing.
The latest measure is the change in the income tax threshold from K17,000 to K20,000.
The income tax exemption for those earning K20,000 and below is a relief for hundreds of Papua New Guineans who fall into this income bracket, as it means they will have a bit more money to spend in their salary envelopes.
It is the second time in as many months that the government has introduced measures to ease the pain felt by its citizens from the escalating cost of living.
Late last year, the Marape government reportedly scrapped the 10% Goods and Services Tax (GST) levied on various food items. Under this arrangement, retailers were supposed to waive the 10 percent GST on certain products. In reality, it appeared the government had only succeeded in scrapping the GST component for fuel, with the consumer price watchdog indicating that it was the only one following retailers who were not to raise prices at the beyond a 10% increase.
Critics may say that all this is not enough; however, it is unrealistic for anyone to demand that the government remove the GST on all goods and services or even remove or reduce the payroll tax rate.
Consumers need to understand that the Marape government is already losing money by removing income tax or granting GST waivers and be happy that it is doing what it can to help them find relief by these difficult times.
At critical times like this, Papua New Guineans should seriously take stock of their spending habits to curb unnecessary spending.
Habits such as chewing betel nut, smoking, drinking alcohol, and gambling should be stopped or minimized. Everyone knows that no one dies if they don’t chew, smoke, drink alcohol or gamble.
Then there are cultural or community events like bride price, haus krai, and compensation payments that need to be stopped or suspended to ease the budgetary pressure on lives. Savings can be made if families reduce these activities and everyone knows it.
It is not fair that many people continue to spend their money on these unprofitable activities, run into money problems and expect the government to bail them out.
Papua New Guineans need to understand that the government is limited in what it can do. They must also help themselves. Hard times call for tough measures.