Inflation rises 4.8% on high food prices

The nation's consumer price index, an inflationary benchmark, rose 4.8 percent year-on-year last month, driven mainly by higher food prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

Growth last month was slower compared with the annual 5.33 percent increase in October, the highest single-month growth in nearly 13 years, DGBAS tallies showed.

But the 4.8 percent increase last month still represented the highest monthly growth since September 1996, the data showed.

The DGBAS attributed the monthly increase last month mainly to a 12.8 percent year-on-year rise in food prices, among the seven sub-indices of CPI measured.

"The increase in food prices is a problem that's happening worldwide," Wu Chao-ming (吳昭明), a section chief at DGBAS, told a press briefing.

"China's food prices increased 11.3 percent from January to October this year, while Hong Kong and the US' both increased 3.8 percent. Taiwan's 2.4 percent increase from January to November is mild in comparison," he said.

Aside from the increase in food prices, rising oil prices were also a major concern. Oil prices last month surged 15.9 percent from the same month last year.

The price of oil per barrel increased 75.2 percent to US$89 last month, Wu said.

Despite the significant increase in international oil prices, domestic prices for 95-octane unleaded gasoline only saw a 17.2 percent rise to NT$30.7 per liter last month, from NT$26.2 in January, he said.

For the whole year, Wu said the DGBAS expects a 1.7 percent increase in the CPI, higher than the 1.39 percent growth forecast by Chung-Hua Institution for Economic Research (中經院) on Tuesday.

Core CPI, excluding fresh fruit, vegetables, fish and energy, rose 2.36 percent last month, making it the fifth consecutive month it exceeded 1 percent and the highest since March 1999, the DGBAS said.

Meanwhile, the wholesale price index rose 8.23 percent year-on-year last month -- the highest since September last year, the DGBAS said. Last month's WPI was also up 1.3 percent from October.

For the first 11 months of the year, the WPI rose 6.27 percent from a year earlier, the DGBAS said.

"A rising core CPI and soaring WPI suggest that inflationary pressures will remain high in the coming months," Citigroup economists Cheng Cheng-mount (鄭貞茂) and Renee Chen (陳瑩若) said in a note to investors last night.

The latest CPI reading could raise market expectation of a 25 basis points in interest rate raise by the central bank this month, the economists said.