The nation’s consumer price index (CPI) rose 0.57 percent year-on-year last month, its slowest annual gain this year, although fruit prices rose more than 20 percent due to continued supply disruptions, the Directorate-General of Budget, Accounting and Statistics said yesterday.
Despite benign inflation levels, the central bank might stop interest rate cuts later this month, as the economy remains on course to sluggish recovery this quarter after returning to positive territory last quarter, economists said.
Food costs, which account for 25 percent of CPI readings, gained 2.61 percent year-on-year last month, pushed up mainly by a steep hike in fruit prices, the agency said in a report.
Fruit prices gained 23.02 percent, as unstable weather disrupted supplies, agency Deputy Director Tsai Yu-tai (蔡鈺泰) told a news conference.
Prices of fishery products increased 5.33 percent and meat rose 0.57 percent, more than balancing out a 3.92 percent decline in vegetable prices, the report said.
Living costs dropped 0.8 percent, as gas and electricity prices fell by 15.68 and 11.68 percent respectively, while water charges picked up 3.68 percent, the report said.
Oil prices declined 4.3 percent, dragging transportation and communication costs down 0.61 percent, the report said.
The inflationary gauge after seasonal adjustments fell 0.23 percent from the previous month, suggesting stagnant consumer prices.
Core CPI — a more reliable indicator of long-term CPI movements, as it excludes volatile items — increased 0.77 percent, almost unchanged from a revised 0.79 percent rise in July, the report said, affirming stable inflation.
The mild CPI figure should give the central bank room for further monetary easing without worrying about inflation, but the monetary policymaker might opt to stay put this time around, Mega Securities Co (兆豐證券) economist Lucas Lee (李志安) said.
The central bank has cut interest rates a total of 50 basis points over the past year.
“Although slow, the recovery appears to be sustainable with the arrival of high sales season for technology products and other sectors, rendering further rate cuts unnecessary,” Lee said by telephone.
It is too early to entertain the thought of rate hikes, as the growth has more to do with a low base last year than a solid recovery in external demand, Lee said.
The wholesale price index (WPI) — a measure of production costs — fell 4.1 percent last month from a year earlier, widening from a revised 2.53 percent decline in July, the report said.
Excluding foreign exchange volatility, export prices weakened 3.09 percent from a year earlier, meaning exports last month needed a larger year-on-year increase to stay in positive territory.
The Ministry of Finance is to unveil last month’s export data today.
In the first eight months of the year, WPI shrank 3.93 percent from a year earlier, the report said.
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