Utility bills drive inflation spike in Maldives

There is no doubt that the prices of many goods and services have increased, even compared to 2023. While factors such as higher taxes and the country's financial situation may contribute to this trend, the Consumer Price Index (CPI) for May 2024 reveals a significant rise in inflation compared to April 2024. This increase is largely due to the substantial hike in utility bills, which has placed a noticeable burden on households across the Maldives.

Despite the Government's efforts to ease the burden during Ramadan, complaints about unreasonably high utility bills surged. On average, citizens paid more for utilities in May compared to April 2024. The housing, water, electricity, gas, and other fuels category saw a significant increase of 7.53%. Within this category, the unit price of electricity services increased by 37.44%, and water services rose by 45.70%. Although the utility companies blamed the bad weather conditions leading to households using more electricity, the inflation hike showcases just how significant of a price increase households in the Maldives faced when it came to their utility bills. While the CPI for all groups increased by 1.51% in May 2024, compared to a 0.76% decrease in April 2024, it’s also worth noting that when excluding fish, the CPI rose by 1.69% in May, compared to a decrease of 0.87% in April.

Additionally, the education services category contributed to the overall inflation with a 0.70% increase, mainly due to higher primary school fees, which went up by 4.55%, and higher school tuition fees, which increased by 3.50%.

While some categories experienced price drops, such as fruits (-4.17%), fish (-1.91%), and passenger transport by air (-2.71%), the overall trend in May was an upward movement in prices. The largest price hikes included food products not elsewhere classified (0.81%), early childhood and primary education (2.09%), and meat (0.54%).

Overall, the Consumer Price Index for all groups rose by 0.77% throughout the year to May 2024, compared to a fall of 1.12% throughout the year to April 2024. This data indicates a notable shift in the inflation trend, highlighting the economic changes affecting households across the Maldives. While the Maldives continues to grapple with its increased debt, the negative effects are starting to showcase starting with increased inflation, the downgraded Fitch ratings as well as the increased prices of obtaining dollars, even in the black-market.