Annual growth of the nation’s headline inflation rate last month fell to its lowest level in more than a year, mainly due to slowing growth in the food sector, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday, adding that sluggish consumption was also a contributing factor.
The consumer price index (CPI) rose 0.74 percent last month compared with the same period last year and in contrast with the 1.04 percent posted in April, marking the lowest level of growth since February last year, the DGBAS said in its monthly report.
Growth in core CPI — which excludes vegetable, fruit and energy prices — expanded 0.43 percent last month from a year ago, the report said.
“Consumer prices remained relatively steady,” DGBAS senior executive Tsuei Chou-ying (崔洲英) told a press conference.
Although vegetable prices increased 7.81 percent last month from a year earlier, the 5.15 percent year-on-year decline in fruit prices helped offset the rising pace of overall food costs, the report said.
Prices in the food sector rose a modest 1.5 percent last month from a year earlier, the report’s data showed.
Consumer spending on eating out also rose 1.66 percent last month from a year earlier, marking its smallest increase since July 2011, an indication that many people may be hesitant to dine out over concerns about food safety following a string a recent food scares, Tsuei said.
In addition, weak momentum in private consumption led some local companies to cut prices to raise sales volumes, helping further ease the rise in consumer prices, Tsuei added.
In the first five months of the year, the headline rate of inflation reading rose 1.45 percent from the same period of last year, the DGBAS’ data showed.
An increase in electricity prices, which took effect this month, may boost the growth of the headline rate of inflation by between 0.05 and 0.06 percentage points this year, the DGBAS said.
The wholesale price index fell 3.28 percent last month from the same period of last year, falling for the 15th month in a row, the report said.
The DGBAS attributed the falling pace of the wholesale price index to a recent decline in global agricultural and industrial raw material prices, as well as falling crude oil prices, which further helped ease the nation’s consumer prices.
Credit Suisse said it expected the headline inflation rate to remain subdued in the coming months, although this could be moderated if there is a pick-up in food prices this summer driven by unfavorable weather conditions.
“The weakness in growth will likely last until November, when the high statistical base of comparison wears off,” Hong Kong-based Credit Suisse economist Christiaan Tuntono said in a research note.
The brokerage said weak inflation has marginally widened the room for the central bank to consider quantitative easing, though it expects the central bank to take no major action in this month’s meeting while it waits for further guidance on expected levels of growth in the second half of the year, Tuntono said.