Fri, Nov 02, 2007 - Page 1 News List

Gasoline prices hit all-time high in Taiwan

By Jessie Ho  /  STAFF REPORTER

Domestic retail gasoline prices reached an all-time high yesterday, after state-run CPC Corp, Taiwan (CPC, 台灣中油) announced it would raise wholesale gasoline and diesel prices by NT$0.9 per liter.

The retail price for 98-octane unleaded gasoline is now NT$32.2 per liter; 95-octane unleaded gasoline costs NT$30.7; 92-octane unleaded gasoline costs NT$30 and premium diesel oil costs NT$27.5, CPC said in a statement.

The new rates went into effect at midnight.

Formosa Petrochemical Corp (台塑石化) announced yesterday it would hike wholesale diesel prices by the same rates.

The adjustment was made in accordance with price fluctuations for Dubai and Brent crude oil prices, which saw an increase of 4.64 percent between September and last month, CPC said in a statement, adding that the nation's pump prices were still the lowest among neighboring countries after the adjustment.

The price hikes were made amid concerns over already rising consumer prices.

Legislators had urged the government to freeze the pricing mechanism, but the policy can be implemented only when a price hike surpasses 15 percent.

"The price hike will send a shock wave through the consumer price index [CPI] and is very likely to prompt the central bank to raise key interest rates in December," Liang Kuo-yuan (梁國源), president of Polaris Research Institute, said in a telephone interview.

The CPI touched a two-year high of 3.08 percent in September and is expected to have soared more than 3 percent last month, pushed by two typhoons, which drove up vegetable prices, Liang said.

After the price hikes in gasoline, CPI for this month may hit 3 percent as well, he said.

The institute predicted last month that the whole-year CPI would be 1.3 percent, but its estimate will be raised following the price hikes in gasoline and some consumer commodities, he said.

"An inflation risk is looming," Liang said.

The central bank raised key interest rates by 0.125 percentage points in September, bringing the discount rate to 3.25 percent.

If CPI continues rising, the real rates will be negative, which is against the central bank's policy of maintaining neutral rates, Liang said.

But considering the mild economic growth, the bank may raise its benchmark rates by only 0.125 percentage points, he said.

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