Sat, Apr 19, 2014 - Page 13 News List

Consumer confidence falls

By Crystal Hsu  /  Staff reporter

Public confidence in the nation’s economic outlook is slipping this month, weighed by noticeable increases in food costs, with inflationary pressures expected to heighten over the next six months, a Cathay Financial Holding Co (國泰金控) survey showed.

Almost 35 percent of the respondents held pessimistic views about the economy over the coming six months, outnumbering the optimism of 29.4 percent, the survey found, while 28.9 percent expect conditions to maintain their current standing.

The shift in sentiment comes after the consumer price index rose to a 13-month high last month on the back of double-digit percentage point increases in meat, vegetable and fruit prices over last year’s levels.

An overwhelming 85.6 percent expect consumer prices to climb higher in the next six months after having picked up for the past six months, the survey said. The survey questioned 27,873 Cathay customers between April 1 and April 7 via the Internet.

Meanwhile, 67.7 percent expect their wages to stay unchanged, with 15.4 percent looking at a pay raise and 16.9 percent anxious about lower income, the survey indicated.

Expectations of stagnant wages and higher living costs drive people to cut spending for nonessentials, as 38.2 percent expressed less interest in durable-goods consumption and 28.3 percent plan to lower their budgets for big-ticket items, the survey showed.

The survey also found that 55.1 percent of respondents intended to keep similar cash positions, 24.8 percent expressed lower interest in stock investment and 20.1 percent planned to increase equity investments.

Meanwhile, almost 50 percent said they would forfeit dividend payouts due to unfavorable income taxation terms.

Investors can declare just 50 percent of income taxes related to stock dividend payouts under the Ministry of Finance’s new tax reform plan.

Consequently, the public holds mixed views about the TAIEX’s performance going forward. About 32 percent think the index may rise while 29.1 percent believe otherwise, according to the survey.

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