Sat, Aug 06, 2011 - Page 12 News List

Inflation rises at slower-than-expected rate

By Amy Su  /  Staff Reporter

Shoppers look at fruit in a Taipei supermarket yesterday. The Directorate-General of Budget, Accounting and Statistics yesterday said the consumer price index last month increased 1.32 percent compared with June, mainly because of a drop in the prices of vegetables and a slowing increase in fruit prices.

Photo: Chien Jung-fong, Taipei Times

The consumer price index (CPI) rose at a slower-than-expected pace last month amid declining vegetable prices because of better-than-expected weather conditions and lower Internet fees, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

The nation’s headline inflation indicator rose 1.32 percent from a year earlier, lower than the 1.93 percent growth recorded in May, DGBAS section chief Wang Shu-chuan (王淑娟) told a press conference.

“The lower level of the CPI came mainly from falling vegetable and telecommunications prices last month,” she said.

Vegetable prices fell 10.82 percent year-on-year, while Internet fees fell 7.11 percent from the previous year, DGBAS said in its report.

A slowing increase in fruit prices also led to the lower figure, providing more evidence that worries over di(2-ethylhexyl) phthalate (DEHP) in food were fading, Wang said.

Based on the DGBAS data, the price of fruit surged 5.77 percent from a year earlier last month, lower than the 21.3 percent increase seen in the previous month.

However, the price of non-durable goods rose 2.62 percent from a year ago and food prices were up 1.66 percent, indicating that the public was still feeling price pressures despite the relatively modest CPI growth rate, Wang said.

The 1.32 percent increase in inflation last month translated into increased costs of NT$792 a month for households with a monthly income of NT$60,000 (US$2,070), when compared with a year earlier, with food costs rising NT$275 and gasoline costs up NT$199, while Internet fees were down NT$121, she added.

Despite last month’s lower-than-expected CPI growth, Tony Phoo (符銘財), a Taipei-based economist at Standard Chartered Bank, said the growth in core inflation was an indication of underlying risks stemming from non-food and non-energy prices.

Growth in core inflation — which excludes vegetable, fruit and energy prices — increased to 1.11 percent last month from a year ago, the fourth month in a row it stood above 1 percent, the DGBAS data showed.

“This suggests the rising rents continue to influence inflation, as housing costs makes up one-third of the CPI basket,” Phoo said in a note, adding that he holds the view that the inflation figure will remain elevated, with headline inflation peaking in the third quarter.

Nevertheless, as the growth of prices of agricultural and industrial raw materials is gradually slowing, DGBAS said inflationary pressure may gradually slow, but weather conditions in the third quarter remain a major risk.

Last month’s wholesale price index (WPI) rose 4 percent year-on-year, a 0.23 percent decrease on the previous month, the DGBAS data showed.

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