Cost of Living Rises: Consumption Spending to Exceed Rs 500 Billion in 2025

By 2025, household and government consumption are expected to reach over Rs 500 billion, according to official data. This increase reflects ongoing inflation and the country’s heavy reliance on imports, which make up more than 75% of all goods—including food and other products—adding pressure on the Mauritian rupee and the US dollar.

The issue of rising living costs remains a hot topic. Trade unions and many in the population are protesting the government’s recent decision to raise the age of eligibility for universal pensions to 65, announced in the latest budget.

Citizens are worried about their purchasing power, feeling it has not improved, and are waiting for their shopping carts to be filled as promised during the last election campaign by the Alliance of Change.

Official figures released on June 30 confirm that consumption expenses continue to grow. In 2025, they are projected at Rs 618.7 billion, up from Rs 580 billion in 2024—a 6.7% increase.

These figures have risen steadily from Rs 493.7 billion in 2022 and Rs 537 billion in 2023. Over three years, household and government spending have increased by Rs 125 billion.

This surge is largely due to the devaluation of the Mauritian rupee, which has dropped 30% against the US dollar since 2020, coupled with roughly the same inflation rate during that period.

Official data show consumption expenses of Rs 402.6 billion in 2022, Rs 445.7 billion in 2023, Rs 476.3 billion in 2024, and Rs 509.3 billion in 2025. This is representing an average increase of over Rs 100 billion annually from 2022 to 2025.

Economists pointed out that inflation has significantly impacted these figures. As prices rise, households spend more, eroding their purchasing power.

They attributed much of this to the rapid depreciation of the rupee, which has depreciated sharply over the past five years.

Additionally, in June 2020, the Bank of Mauritius transferred Rs 60 billion to the Treasury via money printing, injecting more money into the economy and contributing to inflation.

The government has heavily relied on consumer spending to drive growth, but experts debate whether this is sustainable long-term.

Some warned that with over 80% of GDP driven by consumption, the economy risks becoming unstable.

Others highlighted that this model increases household debt, as consumers spend more than they produce, creating a fragile foundation.

Import dependence is another concern. With over 75% of goods imported, including food, the pressure on the dollar remains high.

The country’s trade deficit is significant: the 2025-26 budget reports a Rs 203.7 billion deficit, representing 29.4% of GDP.

This deficit resulted from rising imports and stagnant exports, widening the gap in the current account.

A new monetary strategy aims to stabilize the rupee and control inflation.

Thanks to measures taken by the new Bank of Mauritius leadership, the rupee has strengthened slightly—from Rs 47 to Rs 44–45 against the dollar since January.

The bank also benefited from a roughly 10% decline in the dollar’s value on global markets, influenced by instability in US trade policies and pressures on the Federal Reserve.

However, inflation remains a concern. Consumer prices rose 0.9% from May to June 2025, with the consumer price index increasing from 107.2 to 108.2 points.

This rise is mainly linked to recent budget measures, including higher taxes on certain products.

Unsurprisingly, the main products driving the recent increase in inflation are cigarettes, which added 0.4 points; beer, up by 0.3 points; soft drinks, with a 0.2-point rise; and rum and whisky, each increasing by 0.1 point.

These price hikes are directly linked to higher taxes on certain sensitive products introduced in the latest finance law. However, they do not necessarily affect everyday consumer goods.

In June, inflation reached 5.4% and continues to rise. The Monetary Policy Committee (MPC) will need to consider this trend at their upcoming quarterly meeting when setting the key interest rate for the Bank of Mauritius.

Source: l’Express