Premier projects inflation drop in 2025

Premier and Minister of Finance Dr Natalio Wheatley announced that the inflation rate in the British Virgin Islands (BVI) is expected to decline from over three percent in 2024 to a projected 2.15% in 2025.

During his 2025 budget address last week, Dr Wheatley noted that the Central Statistics Office reported an average inflation rate of 3.30% between January and June 2024, with varying price changes across goods and services. While the rate is not expected to change for the rest of 2024, it is projected to drop next year.

Despite the anticipated decline, Wheatley acknowledged that inflation levels will remain above pre-pandemic rates. He emphasized that the government would continue to monitor inflation trends in the United States, from which the BVI imports most of its goods. The U.S. inflation target typically ranges between 2% and 3%.

“We will continue to explore options for insulating our people from the negative impacts of inflation, including the potential for targeted relief,” Dr. Wheatley stated, adding that his administration is committed to addressing the challenges faced by residents.

Post-pandemic inflation trends

BVI government records show that inflation has fluctuated significantly since the pandemic. The inflation rate was just 0.4% in 2020 but surged to 2.8% in 2021. It slightly declined to 2.5% in 2022 and further decreased to 2.21% in 2023, before rising again to 3.30% in 2024.

Pre-pandemic, the inflation rate stood at 1.4% in 2019. However, the territory experienced its highest inflation rate in five years in 2018, at 2.1%, following the devastating hurricanes Irma and Maria in 2017.

Economic growth slowdown

In addition to inflation concerns, Dr. Wheatley projected a slowdown in the BVI’s Gross Domestic Product (GDP) growth by the end of 2024. He attributed this to several factors, including high borrowing costs, diminishing savings, persistent inflation, the lingering effects of the pandemic, and geopolitical conflicts in the Middle East and Ukraine.

Natural disasters and ongoing economic pressures continue to impact the BVI’s growth trajectory, the Premier stated.

Dr Wheatley’s address emphasised the importance of proactive measures to stabilise the economy while mitigating inflation’s effects on residents.