The consumer price index (CPI) gained 1.97 percent last month from a year earlier, the fastest rise in eight months, as vegetable and fruit prices remained high due to continued supply shortages caused by typhoons in September, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The increase in the headline inflationary gauge might not spur the central bank to raise interest rates later this month, as such a move could derail the economy’s fragile recovery, economists said.
“Of major consumer items, the food category posed the biggest increase of 6.42 percent as the effect of bad weather lingered, pushing fruit and vegetable costs up by 37.53 and 9.56 percent respectively,” DGBAS Deputy Director Tsai Yu-tai (蔡鈺泰) told a news conference.
Together, fruit and vegetable price hikes lifted CPI by 1.44 percentage points last month, more than offsetting the benefits of cheaper electricity and gas costs, Tsai said.
As food costs account for 25 percent of CPI makeup, people with low incomes felt the pinch more, Tsai said.
The readings translate to a 2.35 percent rise in spending for low-income households and a 0.55 percent increase for people with higher incomes, Tsai said.
The inflationary measure after seasonal adjustment inched up 0.29 percent, suggesting mild and stable consumer prices, the DGBAS report said.
Core CPI, a more reliable indicator of long-term inflationary trends because it excludes volatile items, registered a 0.84 percent advance, easing from a 0.96 percent increase a month earlier, the report said.
Transportation and communications costs increased 0.5 percent, up for the third consecutive month, after international crude and raw material prices recovered from two years of sof prices, Tsai said.
CPI rose 1.36 percent from a year earlier, while core CPI averaged 0.84 percent, comfortably below the 2 percent alarm for monetary tightening, Mega Securities Co (兆豐證券) economist Lucas Lee (李志安) said.
“The benign CPI would allow the central bank room to keep interest rates unchanged for the coming six months to support economic growth, despite a likely rate hike by the US Federal Reserve later this month,” Lee said by telephone.
Healthy economic data in the US merit the monetary move, Lee said, adding that US president-elect Donald Trump’s policy plans could affect GDP growth.
The wholesale price index — a measure of production costs — fell 0.28 percent last month from a year earlier, the smallest decline in 27 months, Tsai said.
Export prices rose 0.52 percent in US dollar terms last month, as selling prices for plastic and chemical products picked up, the statistics agency said.
The trend will lend support to the nation’s exports showing last month, which Mega Securities forecast to show a 9 percent increase from a year earlier.
The Ministry of Finance is to unveil export data for last month today.
For the first 11 months of the year, WPI fell 3.39 percent from the same time last year, the report said.
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