With the increasing cost of living there is no surprise that consumers are holding on tight to their purses.

The Reserve Bank of Fiji's Economic Review for the month of March shows that economic activity remained weak and the restrained consumption spending saw a decrease in VAT collection by 3.9% while payments for import of consumption of goods also declined by 8.6%.

The RBF said investment conditions also remained weak, and while the number of jobs advertised rose by around 30 percent, it is difficult to determine whether this increase is due to rising business optimism or to a rising vacancies resulting in weak domestic economic conditions or emigration of skilled workers.

On a positive note, the RBF said provisional data shows that visitor arrivals reached 85,017 up to February this year, indicating a 21.1 percent increase from last year. The Bank said the better than expected outturn in visitor arrivals is expected to help pick up consumer spending in the months ahead.

Also showing signs of improvement is the trade imbalance which narrowed to $104 million compared to $160 million in January 2007. Export earnings also rose by around 51.8 percent driven mainly by sugar, re-exports, mineral water and fish.

The RBF said foreign reserves stood at $914.6 million, sufficient to over 3.9 months of imports.