Inflationary pressure could rise rapidly in the second half of this year on rising commodity and energy prices, although the consumer price index (CPI) only mildly increased last month, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
Last month’s headline inflation indicator increased 1.34 percent from a year earlier, with garment, transportation and food prices rising the fastest, DGBAS section chief Wu Chao-ming (吳昭明) told a press briefing.
A CPI gain of 1.34 percent last month meant an increase of NT$804 (US$28.08) for households that spend NT$60,000 a month, compared with a year earlier, Wu said.
“Inflationary pressure may jump in the second half of the year amid continuing rising commodity and energy prices led by higher crude oil prices,” Wu said.
Local retailers are gradually passing on the higher costs of imported raw materials to consumers, driving up the inflationary pressure in the coming quarters, Wu added.
The DGBAS expects headline inflation to hit 2.18 percent this year, up from its forecast of 2 percent made in February, as rising oil prices led the agency to revise the target price for the OECD oil price to US$108 a barrel from US$94 a barrel in February.
“Every 10 percent increase in the oil price could lead to 2 percentage points of CPI growth,” Wu said.
Last month, the average price of 16 important daily necessities — including flour, meat, eggs, vegetable oil, sugar, instant noodles and toothpaste — grew 3.6 percent year-on-year, DGBAS data showed.
“This meant the public felt deeper price pressure than the average growth of the CPI,” Wu said.
Tony Phoo (符銘財), chief economist at Standard Chartered Bank in Taipei, said yesterday that people are expecting continuing increases in both fuel and food prices, as the average retail price for 95 octane unleaded gasoline rose to a two-and-a-half-year high last month, while food prices are likely to rise further during the typhoon season.
Growth in core CPI — which excludes vegetables, fruit and energy prices — expanded slightly to 0.99 percent last month from a year ago, compared with an increase of 0.98 percent in March, DGBAS data showed.
The wholesale price index rose 4.53 percent year-on-year, down from 5.75 percent in the previous month, on back of the New Taiwan dollar’s appreciation against the US dollar, the agency said.
Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup in Taipei, said in a statement yesterday that last month’s CPI growth was below the market’s forecast of 1.4 percent, an indication that the inflation uptrend remains slow.
However, rising inflation may persist in the coming months, with commodity prices staying at a plateau, Cheng said.
Cheng maintained his forecast for CPI growth this year at 1.8 percent, saying the central bank’s monetary tightening will likely shift into a faster gear as the year progresses.