Fri, Jul 09, 2004 - Page 10 News List

Agricultural losses may cause inflation

STAFF WRITER , WITH CNA

Agricultural damage caused by Tropical Storm Mindulle may add 0.3 percentage points to the nation's inflation rate for this year, a central bank official said yesterday.

The inflation rate, measured by the consumer price index (CPI), may stand at around 1 percent for the whole of this year, said Shih Yen (施燕), director-general of the bank's economic research department.

Shih said that fruit and vegetable prices will jump in the short term due to the damage caused by the storm, pushing up the CPI growth for this month.

Total crop damage has reached NT$2.1 billion as of 11am yesterday, according to statistics provided by the Council of Agriculture.

"There will be a short-term impact on prices of food and vegetables because of the typhoon damage," said Tsuei Chou-ying (崔洲英), a Directorate General of Budget, Accounting and Statistics division chief. "Prices have resumed a rising trend but we don't expect inflationary pressure to increase."

Shih said that the CPI growth will become stable in the fourth quarter and pointed out that the central bank is actually more concerned about the core CPI, which does not include fruit, vegetables and energy prices, which have markedly risen in recent months.

In the first five months of this year, the core CPI growth was mild, but it increased by 1.23 percent for last month alone compared to the previous year's level, when the comparison basis was lower as a result of the SARS outbreak, she said.

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