CPI rises on oil price concerns

Driven by higher gasoline prices, the nation's consumer price index (CPI) rose last month by 1.23 percent from a year ago, leaving average CPI growth for the first four months of the year at 1.32 percent year-on-year, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

The core price index -- which excludes prices of everyday products such as vegetables, fruits, fishery products and energy -- edged up by 0.59 percent during the January-to-April period, DGBAS said during a press conference.

State-run Chinese Petroleum Corp (中油) and smaller rival Formosa Petrochemical Corp (台塑石化) hiked wholesale gasoline prices by an average of 8 percent on April 19, triggering inflation concerns as utility fees came under pressure to make increases.

The wholesale price index (WPI) last month edged up by 3.04 percent from a year ago, reaching its highest value since February last year.

Still, DGBAS section chief Wu Chao-ming (吳昭明) estimated that the CPI growth this year would be kept under 2 percent as declining prices of vegetables, fruits and consumer electronics products would ease the impact from oil price increases.

Citing OPEC figures, Wu said global crude oil traded at US$64.4 per barrel at the end of last month, up by 11.4 percent from March and 29.8 percent from a year ago.

Prices of raw materials also shot up by 15.2 percent last month year on year due to rising demand from developing nations such as Brazil, Russia, India and China.

Despite these disadvantageous factors, Wu said prices of vegetables and fruits were stabilizing until last month when changeable weather affected farm production.

Vegetable prices declined by 3.6 percent during the first four months of the year. Fruit price hikes were also slowing down from 31.9 percent in January to 9.99 percent last month.

"According to government statistics, supplies of vegetables and fruits will rise by 12 percent and 10 percent, respectively, to 3.08 million tonnes and 2.7 million tonnes this year, helping their retail prices to return to normal levels," Wu said.

If weather conditions allow, there would be room for vegetable prices to drop by as much as 20 percent this year, trimming CPI growth by 0.6 percentage points, he said.

Earlier this week, Taiwan Power Co (Taipower, 台電) submitted its price hike plan to the Ministry of Economic Affairs for approval, reasoning that the adjustment could help to stem company losses and reduce electricity wastage.

According to the plan, if Taipower raised electricity rates by 6 percent for households consuming electricity above 400 degrees a month starting next month, the CPI would grow further by between 0.03 and 0.05 percentage points this year, which Wu said was a minimal impact.

When prices for commercially used electricity are hiked by 10 percent starting January, the WPI would edge up by 0.16 percent for the whole year, he said.