Inflationary pressures slackened further last month, with the growth in the consumer price index (CPI) decelerating to 1.88 percent and the wholesale price index (WPI) posting its first decline in three years, thanks to falling fuel and raw material prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
With inflation subsiding, economists said the central bank would have more room to cut interest rates when it meets next week to help spur economic growth.
Consumer prices, the government’s foremost worry in July, have weakened for four consecutive months and returned to norma levels, DGBAS section chief Wu Chao-ming (吳昭明) told a media briefing.
“The CPI gained 1.88 percent year-on-year in November, the lowest since September 2007,” Wu said. “However, the index declined 1.08 percent compared with October, owing to the continued drop in oil and raw material prices, although domestic food costs remained relatively high.”
Food prices last month rose 6.94 percent from a year ago, with cooking oil topping the price hikes at 30.42 percent, followed by vegetables, fish and meat products, which gained 15.1 percent, 13.3 percent and 10.25 percent respectively, the DGBAS report showed.
For the first 11 months of the year, the CPI rose 3.73 percent, slightly higher than the 3.64 percent forecast for the entire year, the report said.
Core CPI, which is used to track long-term inflation as the index excludes energy, fruit and vegetable prices, picked up 3.16 percent, the report said.
For the first time in 36 months, the WPI took a downturn, falling 4.95 percent last month compared with a year ago, the report showed.
However, Wu said it may take a while for wholesalers and retailers to reflect the drop in prices.
The statistics official dismissed concerns about deflation, saying the CPI is forecast to rise 0.37 percent next year, adding that the IMF defines deflation as consumer prices declining for two years.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), agreed that it was too early to worry about deflation.
“Fighting recession will continue to top the government’s agenda,” Liang said by telephone. “Deflation happens when recession is severe and lasts long enough.”
While the economy may currently be lackluster, it is forecast to pick up pace in the second quarter of next year — although the upturn may be delayed, Liang said.
The central bank may have to implement more interest rate cuts to facilitate the recovery, he said.
Wang Lee-rong (王儷容), a researcher at Chung-Hua Institution for Economic Research (CIER, 中經院), agreed.
Wang forecast a rate cut of 25 basis points, driving the discount rate down to 2.5 percent.
But Wang said the government should watch out for signs of deflation. CIER yesterday said consumer price may contract 0.95 percent next year.
“Consumers will delay spending if they expect prices to fall, rendering the government’s campaign to stimulate domestic demand futile,” Wang said.
SMART MANUFACTURING: The company aims to have its production close to the market end, but attracting investment is still a challenge, the firm’s president said Delta Electronics Inc (台達電) yesterday said its long-term global production plan would stay unchanged amid geopolitical and tariff policy uncertainties, citing its diversified global deployment. With operations in Taiwan, Thailand, China, India, Europe and the US, Delta follows a “produce at the market end” strategy and bases its production on customer demand, with major site plans unchanged, Delta president Simon Chang (張訓海) said on the sidelines of a company event yesterday. Thailand would remain Delta’s second headquarters, as stated in its first-quarter earnings conference, with its plant there adopting a full smart manufacturing system, Chang said. Thailand is the firm’s second-largest overseas
‘REMARKABLE SHOWING’: The economy likely grew 5 percent in the first half of the year, although it would likely taper off significantly, TIER economist Gordon Sun said The Taiwan Institute of Economic Research (TIER) yesterday raised Taiwan’s GDP growth forecast for this year to 3.02 percent, citing robust export-driven expansion in the first half that is likely to give way to a notable slowdown later in the year as the front-loading of global shipments fades. The revised projection marks an upward adjustment of 0.11 percentage points from April’s estimate, driven by a surge in exports and corporate inventory buildup ahead of possible US tariff hikes, TIER economist Gordon Sun (孫明德) told a news conference in Taipei. Taiwan’s economy likely grew more than 5 percent in the first six months
SUPPLY RESILIENCE: The extra expense would be worth it, as the US firm is diversifying chip sourcing to avert disruptions similar to the one during the pandemic, the CEO said Advanced Micro Devices Inc (AMD) chief executive officer Lisa Su (蘇姿丰) on Wednesday said that the chips her company gets from supplier Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) would cost more when they are produced in TSMC’s Arizona facilities. Compared with similar parts from factories in Taiwan, the US chips would be “more than 5 percent, but less than 20 percent” in terms of higher costs, she said at an artificial intelligence (AI) event in Washington. AMD expects its first chips from TSMC’s Arizona facilities by the end of the year, Su said. The extra expense is worth it, because the company is
The seizure of one of the largest known mercury shipments in history, moving from mines in Mexico to illegal Amazon gold mining zones, exposes the wide use of the toxic metal in the rainforest, according to authorities. Peru’s customs agency, SUNAT, found 4 tonnes of illegal mercury in Lima’s port district of Callao, according to a report by the non-profit Environmental Investigations Agency (EIA). “This SUNAT intervention has prevented this chemical from having a serious impact on people’s health and the environment, as can be seen in several areas of the country devastated by the illegal use of mercury and illicit activities,”