Mon, Apr 08, 2013 - Page 14 News List

Last month’s headline inflation forecast to slow

By Amy Su  /  Staff reporter

Annual growth of the nation’s headline inflation reading for last month may slow from the 2.97 percent recorded in February, as spending on miscellaneous services, as well as prices of fishery and meat products, returned to normal levels after the Lunar New Year holiday.

The Directorate-General of Budget, Accounting and Statistics (DGBAS) is set to announce the consumer price index (CPI) for last month, following the reading in February hitting its highest level since August last year.

The government has forecast the CPI will be 1.37 percent this year, down from 1.93 percent last year, with year-on-year growth peaking in the first quarter at 1.99 percent.

Headline inflation may show a 2.08 percent growth last month from a year earlier, following the CPI in the first two months rising 2.05 percent year-on-year.

However, DGBAS senior executive Tsuei Chou-ying (崔洲英) said that Taiwan’s headline inflation may have risen by less than 2 percent last month from the previous year because of a high comparison basis last year and the termination of seasonal factors.

The spending on housekeeping and nanny services, travel expenses and taxi fares slowed significantly after the Lunar New Year.

Meanwhile, lower global crude oil prices could also help maintain a steady pace in consumer prices.

However, Singapore-based Barclays Capital senior regional economist Leong Wai-ho (梁偉豪) said headline inflation was likely to have stayed fairly high last month before normalizing. The brokerage house forecast the nation’s CPI will be 1.5 percent this year.

Although the government has forecast that annual growth of headline inflation will slow in the second and third quarters, Taipei-based Standard Chartered Bank economist Tony Phoo (符銘財) said the government’s plan to further raise electricity prices could create uncertainties for the rate of inflation in the second half of this year.

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