Tue, Mar 08, 2011 page12

• Food prices increase faster than CPI

  PRESSURE: Although the rise in prices for most goods was modest, perishable goods such as food rose the fastest, which has economists afraid that inflation might set in

  • By Amy Su / Staff Reporter
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  The consumer price index (CPI) rose by a slower-than-expected pace last month, but the public will feel mounting price pressure as the cost of food and non-durable goods increased at the fastest rate, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

  The nation’s headline inflation indicator hit a three-month high, increasing 1.33 percent from a year earlier last month, with food prices rising the fastest, DGBAS section chief Wu Chao-ming (吳昭明) told a media briefing.

  Food prices jumped 2.69 percent last month from a year ago, Wu said.

  

  A shopper yesterday looks for a bargain during the final sale day of a chain clothing store. According to the Directorate-General of Budget, Accounting and Statistics yesterday, the consumer price index rose 1.33 percent to 106.65 last month from the previous year.

  Photo: CNA

  CPI growth last month did not climb as fast as most economists expected because the index equally factored in prices of all types of goods, Wu said.

  “But people could feel more pressured because the price of food and non-durable goods rose more than the average growth of the CPI,” Wu said.

  The average price of non--durable goods — daily use goods — grew 3.42 percent year-on-year, hitting a 10-month high, compared with 4.6 percent in April last year, DGBAS data showed.

  “Most local retailers have started to pass on the higher costs of imported raw materials to consumers,” Wu said, adding that the effect might continue throughout this year.

  However, Donna Kwok (郭浩庄), an economist for HSBC in Asia, said in a research note that the sequential growth of both the headline and core CPI actually eased last month, as most businesses were still opting to shoulder higher input costs themselves.

  Growth in core CPI — which excludes vegetable, fruit and energy prices — slowed to 0.8 percent last month from a year ago, compared with an increase of 0.81 percent in January.

  On a monthly comparison basis, prices were up 0.76 percent last month, with a 0.38 percent rise after being seasonally adjusted, DGBAS data showed.

  Although consumer prices rose only slightly, rising global commodity prices are stoking inflationary pressures in Taiwan, especially in wholesale prices, Kwok said.

  The wholesale price index (WPI) rose 3.46 percent year-on-year, and grew 1.94 percent from a month earlier because of the continuing increasing prices of chemicals, crude oil and metals, DGBAS said.

  The nation will face further pressure on domestic prices in the coming months as rising international commodity and oil prices will exert further upward pressure on local food and transportation costs, Standard Chartered economist Tony Phoo (符銘財) said in a research note yesterday.

  That gives impetus to an -expected central bank move to hike key interest rates in a board meeting at the end of this month, possibly up 12.5 basis points, taking the benchmark rate to 1.75 percent, Phoo said.

  In December, the bank raised the discount rate 12.5 basis points for the third straight quarter to 1.625 percent.
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