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CPI could rise 3% in first half: Perng

Inflation in the first half of the year is expected to show a 3 percent growth from a year ago as fuel, food and raw material prices remain high, central bank Governor Perng Fai-nan (彭淮南) said yesterday.

However, the pressure on consumer prices is likely to ease in the second half of the year with inflation slowing to about 1 percent year-on-year, Perng said in a draft of his written report submitted to the legislature.

Perng is expected to address rising consumer prices owing to imported inflationary pressures when he appears before lawmakers on Monday.

The bank has raised interest rates 14 times since October 2004 to rein in inflation, with the rediscount rate rising 2 percentage points during the period to 3.375 percent.

The report said that high import costs were the key factor behind the 3.42 percent average increase in the consumer price index in the first two months, contributing about 79 percent to the increase.

The report also noted that the recent appreciation of the NT dollar versus the greenback had helped contain inflation. The NT dollar has risen 5.22 percent so far this year, closing at NT$30.750 yesterday.

The report didn't mention what monetary policy or direction the bank would take during its quarterly meeting on March 27. But it said the bank would take appropriate measures to curb inflation while sustaining healthy economic development.
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