Ministry to monitor consumer prices

With prices of various consumer goods set to increase, the Ministry of Economic Affairs said yesterday that it would closely monitor consumer prices to prevent a drastic rise from impacting on the economy.

Price hikes in consumer goods are mostly resulting from the surge in international grain prices, as many countries develop biofuel from grains, Minister of Economic Affairs Steve Chen (陳瑞隆) told reporters after a meeting on consumer prices and supply and demand of raw materials yesterday.

Prices of 37 percent of consumer goods rose as much as 3 percent last month, while 7 percent of the goods increased by more than 10 percent, Chen said, citing a survey by the Directorate-General of Budget, Accounting and Statistics (DGBAS).

The price of vegetables and fruits negatively impacted by weather saw the largest rise, at 11.71 percent from March to last month, government statistics showed.

Prices of cooking oil, frozen food and dairy products rose 2 percent to 3 percent, Chen said.

The ministry has demanded that Taiwan Sugar Corp (台糖) release 6,000 tonnes of soy beans and 5,500 tonnes of corn it has stockpiled to cater to demand, Chen said.

Overall, the consumer price index (CPI) is still considered reasonable and prices of most staples, such as farm produce, remain stable, Chen said.

The CPI last month increased by 0.67 percent from March and the index for the first four months moved up by 0.9 percent from the same period last year, according to the statistics bureau.

The depreciation of the New Taiwan dollar against the US dollar and euro also pushed prices up, Chen said.

In US dollar terms, prices of imported goods last month rose by 7.61 percent from a year ago, he said, citing ministry statistics.

The price increase was 10.41 percent in NT dollar terms, he said.

Chen Miao (陳淼), a research fellow at the Taiwan Institute of Economic Research (TIER, 台經院), said the rise in CPI was to be expected, as wholesale prices had significantly jumped, which inevitably reflects on consumer prices.

The wholesale price index increased 7.83 percent last month from a year ago, the largest surge in eight months, DGBAS tallies showed.

As domestic consumption has not fully recovered and there is fierce pricing competition between retailers, most supermarket and hypermarket operators absorbed the increased costs, the researcher said. Operators hike prices when they cannot afford the extra costs, he said.

The TIER predicted the CPI would climb 2.19 percent this year.

Aside from consumer goods, the continued price surge in raw materials on soaring demand from emerging countries will also influence local industries, Steve Chen said.

The prices of copper, tin and lead jumped by 10 percent to 70 percent last month from a year ago, while that of nickel increased substantially, he said.

In related news, the minister said the price hikes in grains would not affect the ministry's plan to develop biofuels. The ministry plans to require gasoline suppliers to add 1 percent of bioethanol to gasoline next year. By 2011, gas stations will be required to supply E3 gasoline, a blend of gasoline with 3 percent bioethanol.