Consumer price index declines on vegetable prices

Consumer prices last month declined by 1.54 percent from October, as vegetable prices dropped in the run-up to the peak winter season, according to a statement from the Directorate General of Budget, Accounting and Statistics.

The consumer price index (CPI), a closely-watched indicator to gauge inflation, fell a seasonally adjusted 0.5 percent month-on-month, the bureau said yesterday.

The decisions by the nation's two major oil suppliers, Chinese Petroleum Corp (中油) and Formosa Petrochemical Corp (台塑石化), to slash retail oil prices in the second part of October also contributed to the CPI decline.

However, last month's CPI climbed by 2.47 percent from a year ago, due to higher food costs and oil prices.

Consumer prices between January and last month rose by 2.31 percent year-on-year, according to the statement.

Jao Chih-chien (饒志堅), who is with the bureau's third division, said consumer prices should maintain a downward trend as long as no abnormal climatic conditions occur in the next several months.

The wholesale price index last month fell by 1.13 percent from October but edged up by 0.91 percent from a year ago, the first increase since May.

Chou Ji (周濟), a director at the Chung-Hua Institute of Economic Research's (中經院) economic forecast center, said the inflationary pressure is actually alleviating as the ranges of CPI increases year-on-year have dropped for a third consecutive month.

Despite the good news, he said chances are still quite high that the central bank will continue to raise benchmark interest rates to narrow the interest-rate spread between Taiwan and the US.

On Sept. 15 the bank raised the benchmark interest rate by 0.125 percentage points for the fifth consecutive quarter. The discount rate on 10-day loans to commercial lenders jacked up to 2.125 percent.