Sat, Oct 06, 2012 - Page 13 News List

Inflation slows to 2.96 percent: DGBAS

PRICE CONDITIONS:The bureau reported that overall consumer prices may slow further in the long run as the impact of weather conditions fades out

By Amy Su  /  Staff reporter

Shoppers examine fruit at a market in Taipei City yesterday.

Photo: Chien Jung-fong, Taipei Times

Annual growth of the nation’s consumer price index (CPI) stood at 2.96 percent last month, down from the 3.42 percent recorded a month earlier, as vegetable prices gradually fell from their record-high level in August triggered by torrential rains, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

However, the 2.96 percent year-on-year expansion in headline inflation still marked the second-highest level in more than four years, due mostly to a low base figure.

On a monthly basis, the CPI dropped 0.33 percent last month, the DGBAS said in its monthly report.

“The restoration of vegetable supplies helped drive vegetable prices back down to a steadier level last month, further leading to the slowing expansion in the CPI,” DGBAS section chief Wang Shu-chuan (王淑娟) told a press conference.

Prices of vegetables slid 17.02 percent last month from August, driving prices for the food sector to a 1.05 percent month-on-month decline, the report said.

However, vegetable and fruit prices still exhibited a significant rising trend last month compared with the same period last year, which gave a low base for comparison due to stable weather conditions, Wang added.

On an annual basis, fruit prices increased 29.04 percent last month, with vegetable prices surging 26.26 percent, the report showed.

They also drove up the annual growth in overall food prices to 6.54 percent — the most among the seven components of the index, raising headline inflation by 1.84 percentage points, Wang said.

The 6.54 percent increase in food prices translated into an increase of NT$1,093 (US$37) in food costs per month for households with expenditures of NT$60,000 per month, statistics showed.

In the first nine months, headline inflation rose 1.96 percent, the DGBAS report said.

The level of inflation raises uncertainty over whether the full-year expansion in the CPI will remain under the 2 percent level targeted for this year by the government.

Currently, there has been no clear answer to this question, Wang said, adding that the government’s measures to rein in price growth and the trend in global raw material prices could affect consumer prices in the near future.

However, Wang said overall consumer prices may slow further in the long run, as the short-term impact from weather conditions fades out.

The slowing wholesale price index (WPI), which slid 2.19 percent year-on-year last month, an indication that the US Federal Reserve’s third round of quantitative easing measures has not raised global raw material prices as expected, Wang said.

Growth in core CPI — which excludes vegetables, fruit and energy prices — expanded slightly to 0.89 percent in the first nine months, providing more evidence that long-term consumer prices remained steady, Wang added.

DGBAS will update its forecast for full-year growth in headline inflation on Oct. 31.

In August, it estimated the nation’s CPI could rise 1.93 percent this year.

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