The nation's inflation eased for a second month last month, suggesting that the central bank may end its three years of interest rate hikes.
Consumer prices climbed 3.34 percent last month from a year earlier, down from November's 4.8 percent and their highest point, 5.3 percent, in October, the government's statistics bureau said yesterday.
"The Central Bank is unlikely to raise the interest rates again as long as there is no significant rise in inflation," said Tony Phoo (符銘財), chief economist at Standard Chartered PLC (渣打銀行) during a telephone interview yesterday.
The full-year consumer price index (CPI) averaged an annual 1.8 percent growth last year and could continue to climb over rising food prices in the first half this year, Wu Chung-ming (
Phoo agreed.
"The CPI will remain at about 2.5 percent in the first half of this year, but will likely drop to below 2 percent in the second half," Phoo said, adding that the CPI's 5.3 percent rise in October was unlikely to happen again.
Food prices, which account for a quarter of the CPI, rose 7.57 percent, slower than the 12.81 percent in November.
Food prices drove inflation to 5.3 percent in October, the highest in 13 years, after a typhoon damaged crops.
"Compared with the rise in food prices in other countries -- 11.9 percent in China, 3.9 percent in the US and 2.7 percent in Singapore -- the nation's 2.86 percent rise is considered mild," Wu said.
Core consumer prices, a category excluding vegetables, fruits, fish and energy, rose 2.57 percent last month after climbing 2.36 percent in November.
Higher inflation remains a risk in Taiwan and across Asia as energy costs surge.
The government could increase its inflation forecast for this year from 1.84 percent after crude oil reached US$100 a barrel for the first time, a macroeconomic forecasting official at the statistics bureau said on Thursday.
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