Benign Inflation Outlook For Barbados In 2025

• Price growth in Barbados is expected to average 2.1% in 2024 and 1.9% in 2025, down from 5.0% in 2023 projects Fitch Solutions.
• Barbados is heavily reliant on imports for both fuel and food and is therefore highly exposed to fluctuations in global commodity prices. As a result, the ongoing normalisation in global fuel and food prices following Russia's invasion of Ukraine in 2022, alongside the dissipation of secondary effects, informs this benign outlook for inflation in the coming quarters.
• Fitch’s Oil & Gas team projects that Brent crude oil prices will average USD78 barrel of crude oil (bbl) in 2025, down 3.7% from its 2024 forecast and 21.2% below the 2022 average of USD99.0/bbl. Meanwhile, its Agribusiness team expects that the emerging La Niña cycle will have a mixed impact on global agricultural food prices, pointing to a broadly neutral effect on domestic food inflation.
• Additionally, robust foreign reserve levels will support the Central Bank of Barbados' (CBB's) mandate to protect the currency peg, which will, in turn, neutralise exchange rate-driven imported price pressures.
• That said, risks to these inflation projections are to the upside. While global energy and food prices will remain broadly stable in 2025, escalating geopolitical tensions in the Middle East pose persistent upside risks to oil prices.

(Source: Fitch Solutions)