Tue, Dec 08, 2009 - Page 12 News List

CPI drops for 10th straight month

INCOMPLETE RECOVERYDespite a 1.3 rise in overall transportation costs amid higher oil prices, the prices of vegetables, fruit and outbound travel declined


Taiwan’s consumer price index (CPI) dropped for the 10th consecutive month last month, recording a decline of 0.75 percent on the previous month and 1.59 percent from the same period last year, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

For the January-to-November period, the average CPI dropped 0.92 percent from last year.

Despite the 1.3 percent rise in overall transportation costs last month, which was fueled by oil costs, the prices of vegetables, fruits and outbound travel packages declined, causing the CPI to drop, DGBAS section chief Wu Chao-ming (吳昭明) said.

“Vegetables and fruits have entered mass production season, with average prices dropping 22.65 percent and 4.91 percent respectively last month,” he told a press briefing.

Prices for outbound travel dropped as companies offered discounts to attract travelers amid fears of a swine flu pandemic. The prices of computer products also declined — a chronic cycle thanks to new technology upgrades, Wu said.

The statistics agency dismissed deflation risks this year, saying that the CPI had only fallen for 10 consecutive months rather than two consecutive years.

It said the index should increase 0.93 percent in the next quarter amid rising commodity and housing prices.

“The economy has rebounded from its low, but not fully recovered,” Wu said, expecting companies to continue promotion campaigns and discounts into next year to encourage spending.

Despite the drop in the CPI last month, the wholesale price index (WPI) saw its first month-on-month growth in 12 months to 1.01 percent. For the first 11 months, the WPI, however, dropped 9.92 percent from last year.

The WPI gauges manufacturers’ wholesale prices of products to retailers before consumers purchase them.

“This shows that manufacturing costs rose in line with rising raw material costs, but weren’t necessarily passed to the consumers,” Wu said. “Retailers were cutting prices amid sluggish consumer spending and high unemployment.”

The agency said late last month that the job market could take two to three years to recover to pre-recession levels, despite two consecutive months of improvements in unemployment to 5.96 percent in October, thanks to local companies’ increased hiring in response to recovering global demand.

Unlike Taiwan, the average CPI for the three other Asian Tigers — South Korea, Singapore and Hong Kong — rose 2.8 percent, 0.3 percent and 0.4 percent respectively for the January-to-November period.

Wu attributed the contrast to the structural differences of each country. For example, the prices of South Korea’s imported goods rose amid weakening the Korean won, and this drove the country’s CPI.

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