Taiwan’s inflation rate last year hit its lowest level since 2009, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The DGBAS said the national consumer price index (CPI) increased by 0.79 percent last year, with the headline inflation rate standing at just 0.56 percent during the October-to-December quarter.
The DGBAS had expected the index to rise 1.12 percent annually in the fourth quarter of last year following the government’s electricity and fuel price hikes in October last year.
However, the effect of the higher prices was weaker than expected, DGBAS Deputy Director Tsai Yu-tai (蔡鈺泰) said at a press conference.
MILD AND MODEST
“The CPI results indicate that consumer price inflation remains mild and modest,” he said.
The index rose 0.33 percent last month from a year earlier, the slowest rate of growth since August and lower than market expectations of about 0.8 percent, the DGBAS said in its monthly report.
However, the overall cost of non-durable goods increased at a faster pace than headline inflation at 1.38 percent last month from a year ago, the report showed.
The expansion of core CPI — which excludes vegetable, fruit and energy prices — was slower than than the headline inflation rate at 0.21 percent, the report said.
“Low core inflation and a benign global inflationary backdrop will continue to provide the central bank room to support the ongoing recovery in Taiwan, which remains in its early stages,” Barclays Capital economist Leong Wai Ho (梁偉豪) said in a research note yesterday.
Barclays said the central bank would keep its interest rate unchanged until the second half of this year as Taiwan’s headline inflation would average 1.8 percent this year, compared with the DGBAS’ forecast of 1.2 percent.
WHOLESALE PRICE INDEX
Meanwhile, the wholesale price index (WPI) rose 0.02 percent last month from a year earlier, ending a trend of year-on-year contractions for the previous 21 consecutive months, the DGBAS said in its report.
For the whole of last year, the WPI dropped 2.43 percent from 2012, data showed.
In related news, the nation’s foreign exchange reserves rose to a new high of US$416.81 billion last month, up US$1.25 billion from a month earlier, the central bank reported yesterday.
The central bank attributed the monthly gains to the appreciation of the euro against the US dollar, which helped boost the conversion value of its assets in other currencies.
Investment gains also helped push Taiwan’s foreign exchange reserves higher, according to the central bank.
Additional reporting by CNA