Central bank Governor Perng Fai-nan (彭淮南) sounded the alarm yesterday about higher inflation in the months head, after Tropical Storm Kalmaegi caused widespread damage to crops, livestock and fisheries last week.
Perng said inflationary pressure remains high at home and abroad and the consumer price index (CPI) is likely to climb again after last week’s flooding.
Kalmaegi caused agricultural damage totaling NT$837 million (US$27.65 million), the Council of Agriculture said earlier this week.
Perng reiterated that stabilizing commodity prices is the bank’s top mission and he urged the public to avoid consuming leafy vegetables ,whose prices have skyrocketed.
The CPI rose to 4.97 percent year-on-year last month, driven by surging fuel, food and raw material costs. That number is expected to rise this month because state-run Taiwan Power Co (台電) raised electricity rates by 12.6 percent, while fuel prices are likely to rise next month in line with the government’s floating price mechanism.
Perng said he saw a silver lining in the fact that oil prices dropped to US$124 a barrel yesterday morning after hitting US$146 a barrel a week earlier. But he refused to say how the central bank plans to tackle rising inflation, saying the matter would be discussed at the board’s next meeting in September.
The board raised the bank’s discount rate by 12.5 basis points and asked lenders to set aside more savings reserves last month. The measures took some NT$200 billion from the capital market.