Tobacco products have become the single largest driver of inflation in the Maldives, according to the latest figures released by the Maldives Monetary Authority (MMA), highlighting the growing impact of higher cigarette prices on the cost of living.
Data published by the central bank shows that tobacco alone contributed 2.11 percentage points to the country’s annual inflation rate. This was significantly higher than other key categories, with fruits contributing 0.61 percentage points and fish accounting for 0.36 percentage points.
Overall inflation showed signs of easing in September, with month-on-month inflation recorded at 3.9 percent, a 0.4 percentage point decline compared to August. MMA noted that the most significant upward pressure on prices during the month came from higher electricity tariffs, which were the largest contributor to monthly inflation.
Inflation levels peaked earlier this year in April at 5.9 percent, up from 5.6 percent at the start of the year, before gradually moderating in subsequent months. September marked the sharpest decline in inflation recorded so far this year.
Regional data revealed notable differences in price trends, with inflation in the Malé region standing at 3.3 percent, while the atolls recorded a higher rate of 4.8 percent. The central bank said rising food prices remained the primary driver of inflation outside the capital.
The latest figures align with inflation trends observed last year, when price pressures intensified following increases in cigarette and tobacco taxes. According to earlier data from the Maldives Bureau of Statistics, inflation climbed to 4.8 percent last year, largely driven by sharp rises in cigarette prices, marking the steepest increase in commodity prices in four years.
In December last year alone, cigarette prices rose by 10 percent compared to November, while restaurant prices increased by 8.9 percent, reflecting the knock-on effect of higher tobacco costs on the food and hospitality sector. Prices of vegetables, fruits and electronic appliances also recorded notable increases during the same period.
While tobacco and food prices surged, some categories saw declines. Communications prices fell by 3.73 percent, while electricity and water prices dropped by 2.28 percent and 0.69 percent respectively. Inflation in fish products stood at 7.6 percent, while health services recorded an increase of 4.2 percent.
Economists have noted that persistent increases in tobacco prices continue to play an outsized role in shaping overall inflation trends in the Maldives, particularly as indirect effects spread across other sectors of the economy.
