The consumer price index (CPI) contracted 0.19 percent last month from a year earlier, dragged down by cheaper fuel prices and electricity rebates, though the food and entertainment industries were boosted by the Lunar New Year holiday, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said in a report yesterday.
The inflationary gauge logged negative growth for the second consecutive month, but analysts dismissed worries over deflation, saying that private consumption remained healthy and might accelerate due to energy and transportation cost savings.
“Of greater significance is that the core CPI [consumer price index] — which the central bank tracks closely and indicates underlying price pressure — rebounded to 1.78 percent last month, after slipping to 0.64 percent in January,” Standard Chartered Bank senior economist Tony Phoo (符銘財) said in a note.
This is the fastest core CPI increase since February, 2013, and shows that the underlying price pressure remains a concern, Phoo said.
Fuel prices fell by 28.11 percent last month, while electricity costs plunged 24.72 percent, the DGBAS said.
State-run utility Taiwan Power Co (Taipower, 台電) last month passed on cost savings from lower oil prices with electricity rebates to households.
The rebate trimmed 0.59 percentage points from the headline CPI, the DGBAS said, adding that electricity rebates and lower oil prices brought down the headline CPI by 1.6 percentage points.
After seasonal adjustments, the CPI rose 0.01 percent last month, and for the first two months, the inflationary indicator softened by 0.56 percent from the same period last year, the report said.
Food prices, which account for 25 percent of the CPI, fell 1.32 percent, with vegetable prices dropping 15.23 percent, easing the impact of the 4.59 percent and 2.08 percent price increases of fish and meat respectively, the DGBAS said.
Dining costs, which constitute 10 percent of the CPI, climbed by 3.76 percent last month, though the pace marked the slowest increase in 10 months, the report said.
Cheaper oil prices are likely to keep the inflationary gauge in negative zone for the entire first half of this year, contracting 0.33 percent this quarter and another 0.26 percent next quarter, DGBAS predicted last month.
Soft inflation pressure caused by cheaper oil is favorable for corporate profit margins, consumer spending and the economy as a whole, the DGBAS said.
Meanwhile, the wholesale price index, a measure of production costs, fell by 8.49 percent last month, the sharpest decline in almost five-and-a-half years, amid continued price falls for crude, chemical, basic metal and electronic products, the report said.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable