The nation’s consumer price index (CPI) last month edged up 0.59 percent annually as medical, transportation and miscellaneous expenses gained modestly, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The benign inflation might allow the central bank to hold interest rates steady later this month and beyond, as the nation’s economic growth momentum has slowed, Australia and New Zealand Banking Group Ltd (ANZ) said.
“Overall the inflationary pressure is mild, although prices for some food items went up, as did other living costs,” DGBAS Senior Executive Officer Jasmine Mei (梅家瑗) told a media briefing.
Of major goods and services purchased, miscellaneous costs last month picked up 2.07 percent as barbers, babysitters and other service providers received holiday compensation over the Dragon Boat Festival, the DGBAS said in a report.
Medical and health-related costs rose 1.83 percent, as hospitals raised fees for outpatient treatments to discourage unnecessary visits, the report said, adding that co-payments at large hospitals rose 4.59 percent for outpatients who were not referred by community clinics.
Housing costs rose 0.98 percent on the back of higher rent and gas rates, the report said.
Transportation and communication costs advanced 0.53 percent, as oil product prices continued to inflate, more than muting a decline in telecommunications fees, it added.
Food prices — usually the primary driver of inflation, as they account for 25 percent of the index — decreased 0.04 percent, dragged by cheaper vegetable and fruit prices, despite an increase in costs for meat, fish and dairy products, the report said.
After seasonal adjustments, the inflationary gauge inched up 0.08 percent, the report said, adding that core CPI, a more reliable tracker of long-term price trends because it excludes volatile items, registered a 1.11 percent increase.
For the first five months of this year, CPI rose 0.6 percent, lending support to stable consumer prices, Mei said.
The wholesale price index (WPI), a measure of commercial production costs, declined 1.12 percent, slipping into the negative for the first time since November last year, the agency said, adding that appreciation of the New Taiwan dollar compensated for import costs.
Export prices dropped 3.38 percent in NT dollar terms, but gained 4.4 percent in US dollar terms, the report said.
Hong Kong-based ANZ chief economist for greater China Raymond Yeung (楊宇霆) said the WPI data offered a textbook example of currency appreciation fending off inflationary pressure.
“The foreign exchange rate has acted as an alternative monetary policy instrument to smooth the impact of commodity price hikes,” Yeung said in a note.
The central bank will keep the rediscount rate at 1.375 percent for this year and next year to support the domestic economy, which has shown signs of a slowdown, regardless of any interest rate increases by the US Federal Reserve, he said.
The NT dollar has gained 8.02 percent against the greenback over the past 12 months.
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