Wed, Feb 06, 2013 - Page 13 News List

DGBAS says inflation rate could show steep increase

HEADING UPWARD:Brokerage house Barclays Capital expects headline inflation in Taiwan to climb back above 2.8 percent this month from the previous year

By Amy Su  /  Staff reporter

A sales clerk helps shoppers select tropical fruit at a market in Taipei yesterday. The Directorate-General of Budget, Accounting and Statistics has announced that last month’s consumer price index was 1.15 percent higher than a year earlier.

Photo: CNA

The Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday that annual growth in headline inflation for this month could show a significant rise from last month, as the upcoming Lunar New Year holiday may drive up consumer prices.

The remarks came after the DGBAS announced the consumer price index (CPI) for last month, which rose by a moderate 1.15 percent from a year earlier, down from the 1.6 percent annual growth recorded in December last year.

Core CPI — which excludes vegetables, fruit and energy prices — climbed 0.33 percent last month from a year earlier, marking the smallest increase since February last year, the DGBAS said in its monthly report.

“The Lunar New Year holiday was in January last year, with prices for various goods and services rising as usual, boosting the comparison basis during the period,” DGBAS section chief Wang Shu-chuan (王淑娟) told a press conference.

Traditionally, prices for certain goods and services — such as taxi fees, fees for nannies and hotel room rates — climb during the Lunar New Year holiday.

However, the same factor may boost consumer prices this month on the back of positive distortion from the low comparison base in February last year due to Lunar New Year timing differences, Wang added.

In addition, prices for goods which people usually buy once a month — mostly daily necessities — surged by an average of 3.3 percent last month from a year earlier, explaining why consumers feel the weight of increased prices compared with the real figures reflected in headline inflation.

The wholesale price index (WPI) rose 0.22 percent last month from December last year, reflecting the recovery of the global economy, the report said. On an annual basis, the WPI dropped 3.81 percent last month.

Leong Wai Ho (梁偉豪) a Singapore-based economist at Barclays Capital, shared the DGBAS’ prediction of rising inflationary pressure during this month.

The foreign brokerage house expects headline inflation in Taiwan to climb back above 2.8 percent this month from the previous year, due to the seasonal pickup in demand over Lunar New Year.

However, full-year inflation could average at 1.5 percent, lower than the 1.93 percent recorded last year, amid more neutral weather patterns in Asia, Leong said.

The 1.5 percent forecast was still higher than the 1.31 percent rise in consumer prices estimated by DGBAS last week.

Barclays Capital expects the central bank to keep its policy rates unchanged at 1.875 percent at its board meeting next month.

To provide incremental support to the nation’s economy, the central bank may continue injecting liquidity and keep the overnight rates steady at a level of around 0.38 percent, Leong added.

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