Wed, Jan 07, 2015 - Page 13 News List

Nation sees 0.61% rise in inflationary pressure

EXPENSIVE TREATS:Plummeting oil prices and lower transportation costs were not enough to reduce inflationary pressure last year, a DGBAS report showed

By Crystal Hsu  /  Staff reporter

Inflationary pressure decelerated to 0.61 percent year-on-year last month, driven by food cost hikes that more than muted steep declines in transportation and oil product prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

The latest consumer price index (CPI) reading was slower than the market expectations of 0.73 percent, but remained relatively high for people who eat out, as dining costs rose 4.48 percent, growing by faster than 4 percent for the sixth consecutive month, the report showed.

“People who dine out bear a great deal of the price increase, given that dining costs constitute 10 percent of the CPI makeup,” agency Deputy Director Tsai Yu-tai (蔡鈺泰) told a news conference.

Food costs rose by 4.34 percent last month from a year earlier due to sharp increase in egg, meat, vegetable and fishery product prices, although fruit prices dropped by 0.32 percent, the report showed.

Pork prices grew to a 15-year high last year, as an epidemic of porcine epidemic diarrhea dented supply, while egg prices climbed by 10.58 percent to a three-year high, Tsai said.

The increase in food costs more than cancel out the cuts in transportation and communications costs, which dropped 4.85 percent last month from a year earlier, Tsai said.

Fuel prices fell 21.07 percent, the biggest drop in more than five years, the report said.

The core CPI — which is more reliable in tracking long-term inflationary pressures because it excludes volatile vegetable and energy costs — grew 1.38 percent last month, slowing from a revised 1.41 percent in November last year, the report said.

Altogether, the CPI picked up 1.2 percent for all of last year, faster than the 1.18 percent increase the statistics agency forecast in November.

The DGBAS expects the inflationary gauge to rise 0.91 percent this year, as crude oil prices are likely to remain low if oil-producing nations maintain their price war.

The wholesale price index (WPI), a measure of production costs, retreated 4.2 percent last month, deeper than the revised 2.87 percent decline observed in November, due to cheaper oil and raw material prices, the report showed.

For all of last year, the WPI contracted 0.51 percent, worse than the 0.15 percent fall projected by the DGBAS earlier.

The production cost measure is expected to drop 2.13 percent this year, the statistics agency said.

British banking group Barclays PLC expects downward pressures on CPI to build up going forward, giving the central bank room to slow interest rate hikes.

“While the Central Bank of the Republic of China may gradually reduce its support for the economy in the months ahead, it is likely to do so at a slower pace,” Singapore-based Barclays senior economist Leong Wai Ho (梁偉豪) said in a note.

The monetary policymaker might raise interest rates by 12.5 basis points in September, Leong said.

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