Thu, Jan 06, 2005 - Page 11 News List

Prices rise but inflation steady

UPWARD TREND The government was not overly concerned with minor increases in the consumer and wholesale price indices because the price of oil is stabilizing

By Joyce Huang  /  STAFF REPORTER

Consumer and wholesale prices edged up last month compared with the same month last year, due to rising costs of vegetables, seafood and meat as well as oil and steel, the Directorate General of Budget, Accounting and Statistics (DGBAS) said yesterday.

The consumer price index (CPI), a closely-watched indicator gauging the nation's inflation, jumped 1.62 percent year on year to 101.34 points last month.

Seasonally adjusted, the December figure was up 0.3 percent from November, DGBAS division chief Wu Chung-ming (吳昭明) said at a press conference yesterday.

The wholesale price index (WPI) jumped 6.29 percent year on year to 109.97 percent last month, but fell 1.35 percent from November, seasonally adjusted.

Wu said inflation was up 1.62 percent for the whole year of 2004, the highest level since 1998. But he said that the directorate general had retained its previous estimate of 1.88 percent growth in the CPI this year.

Although both the CPI and the WPI are still on an upward trend, Wu said that people shouldn't be worried about inflation as oil prices are stabilizing and likely to decline this year.

The CPI last peaked in the third quarter of last year to average at 2.89 percent. It fell below 2 percent in November and would "pose no inflationary pressures," Wu said.

The DGBAS had previously predicted that the CPI may see a 0.4 percent increase if oil prices rose by 10 percent.

The central bank last week raised its benchmark interest rate for the second consecutive quarter by 0.125 percentage points in a bid to lower the risk of inflation.

Central Bank of China Governor Perng Fai-nan (彭淮南) has said the proposed hikes in utility fees may slightly lift the CPI this year.

Wu agreed, saying that the CPI may see a 0.05 percent increase annually if water costs rise 10 percent and a 0.37 percent increase if electricity costs rise 10 percent.

As for the hike in health insurance fees, Wu said that the impact would be minimal because the hike would be included in salaries and therefore excluded from CPI.

The WPI surged 7.06 percent last year, the highest level since 1996. But Wu said the WPI has also been on the wane and is unlikely to turn around this year.

Among WPI components, prices of exports and imports rose 1.49 percent and 5.4 percent last month respectively, compared to the same month last year, a result of rising oil and raw material prices, according to the DGBAS.

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