Consumer Prices on the Rise, Still Above Target, Yet Dropping This Month Due to Falling Oil Prices
- By Chen Cheng-hui / Staff reporter
Prices of dining out and fruits escalate, leading to a 2.03 percent increase in Consumer Price Index (CPI)
Taiwan's consumer price index (CPI) clocked in at 2.03 percent year-on-year last month, surpassing the central bank's 2 percent target for the second straight month [1]. The hike in prices can be attributed to a rise in food and fruit costs, as well as higher dining-out expenses [1].
However, the inflationary gauge slowed down from the previous month's 2.32 percent, indicating a deceleration [1]. This month, the CPI might dip due to the recent plunge in international crude oil prices [2].
Food prices jumped 4.34 percent annually, with fruit seeing a whopping 25.26 percent increase. Meat prices also rose 4.46 percent, and cereal products such as bread and cakes increased 3.38 percent [1].
Dining-out costs surged 3.48 percent from a year earlier, marking an increase over 6 consecutive months and the highest rise over the past 13 months [1]. Despite the hefty spending, the public's perception remains that consumer prices are steadily increasing [1].
On a brighter note, transportation and communications costs tumbled 0.76 percent from a year ago, thanks to a 3.74 percent decrease in international energy prices and a 2.13 percent price fall in communication fees [1]. Despite these drops, rents crept up 2.4 percent year-on-year, marking the smallest increase in the past 12 months [1].
Low-income households felt the strain of the price rise as food costs account for a larger portion of their spending [1]. Interestingly, core CPI, which excludes price-volatile items such as vegetables and oil, rose 1.66 percent last month, slightly below the 2 percent target for 13 consecutive months [1].
In the first four months of the year, CPI soared 2.15 percent from the previous year, while cumulative core CPI increased 1.64 percent [1]. Producers' price index (PPI), on the other hand, climbed 0.93 percent year-on-year in April [1].
The Directorate-General of Budget, Accounting and Statistics (DGBAS) expects no imminent risk of a hike in Taiwan's prices due to the US trade policy. However, the recent strengthening of the New Taiwan dollar could impact import prices [2]. The effects on the CPI should become apparent in one to two quarters [2].
Given the recent drop in oil prices, it is plausible that the CPI will fall below 2 percent this month [2]. Keep in mind that while decreased oil prices could potentially temper energy costs, food prices have been the primary driver of Taiwan's current inflation, leading to less noticeable effects from the lower oil prices [2][3].
Here's a cursory glance at why food prices have been on the rise:
- Food prices have been influenced by various factors, including supply shortages and unfavorable weather conditions for certain agricultural products [3].
- The rapid expansion of newly constructed restaurant chains has led to increased competition in the dining sector, ultimately pushing prices up [3].
- The downturn of Taiwan's currency against the US dollar, coupled with strong consumer demand, has contributed to the rise in dining-out costs [4].
[1]: News source 1[2]: News source 2[3]: Enrichment Data[4]: News source 3
- The Consumer Price Index (CPI) might decrease this month due to the recent plunge in international crude oil prices, as suggested by the Directorate-General of Budget, Accounting and Statistics (DGBAS).
- Food prices, including fruit, have been the primary driver of Taiwan's current inflation, despite a decrease in international energy prices and communication fees.
- The decrease in oil prices could potentially temper energy costs, but the impact on the overall CPI might be less noticeable due to the ongoing rise in food prices.
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