The consumer price index (CPI) rose by a slower-than-expected pace last month, but inflation for the full year could surpass the government’s target amid rising global oil and commodity prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
Inflation last month expanded 1.1 percent from a year earlier, with food prices — which rose 1.99 percent from a year ago — increasing the fastest, DGBAS section chief Wu Chao-ming (吳昭明) said.
CPI growth last month did not rise as fast as most economists expected because most local companies had not passed on the higher costs of imported raw materials to consumers yet, Wu said, adding that its effect might become evident later this year.
Wu added that inflation could exceed the government’s target of 2 percent for the full year if world fuel and commodity prices were to keep rising.
“Although it [last month’s CPI growth of 1.1 percent] is below our forecast of 1.5 percent as well as consensus estimates of 1.6 percent, overall prices edged higher month-on-month for the seventh time in eight months,” Standard Chartered economist Tony Phoo (符銘財) said in a research note yesterday.
That is an indication that Taiwan is facing inflationary pressure as rising oil and commodity prices would boost the prices of food and transportation cost, Phoo said.
The latest economic data also suggested that the central bank could further tighten monetary policy when policymakers meet late next month to rein in rising domestic pricing pressure, Phoo said.
The central bank is likely to raise its key interest rate by another 12.5 basis points, he said.
In December, the bank raised the discount rate 12.5 basis points for the third straight quarter to 1.625 percent.
Growth in core CPI — which excludes volatile vegetable, fruit, fish and energy prices — slowed to 0.81 percent last month from a year ago, compared with an increase of 0.99 percent in December.
On a monthly comparison basis, prices were down 0.01 percent last month because of winter promotional discounts, including clothing, the DGBAS said.
The wholesale price index (WPI) also rose 1.64 percent year-on-year, but dropped 0.22 percent from a month earlier because of the 2.78 percent appreciation of the New Taiwan dollar against the US dollar last month, the DGBAS said.
The prices of imported global raw materials remained high last month, with sugar, cotton, copper and tin prices hitting record highs, the DGBAS said.