Annual inflation expanded at its fastest pace in four years last month, as vegetable and fruit prices climbed after the nation was struck by two typhoons, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The consumer price index (CPI) rose 3.42 percent last month from a year ago, following a 2.46 percent increase in July. It marked the highest level since August 2008, when the index expanded 4.68 percent, the DGBAS said in its monthly report.
DGBAS section chief Wang Shu-chuan (王淑娟) attributed the higher-than-expected rise in consumer prices last month to the surge in vegetable and fruit prices triggered by the two typhoons — Saola and Tembin — and torrential rains.
Vegetable prices increased 57.93 percent last month from a year earlier, the highest since October 2007, while fruit prices rose 20.14 percent, the report said.
“The year-on-year increase in vegetable and fruit prices boosted headline inflation by 1.89 percentage points last month,” Wang told a press conference.
They also drove up the annual growth in overall food prices to 8.66 percent — the most among the seven components of the index, raising headline inflation by 2.42 percentage points, Wang said.
“That means more than 70 percent of the 3.42 percent growth in headline inflation was driven by food costs,” Wang added.
Excluding vegetable, fruit and energy prices, core CPI grew by a more subdued 0.89 percent last month from a year ago, compared with an increase of 0.95 percent in July, DGBAS data showed.
Wang said the trend in core CPI showed that headline inflation might stabilize if the weather holds and food prices see only a modest increase.
The slowing wholesale price index (WPI), which slid 0.94 percent year-on-year last month, also provided more evidence that the major factor driving up consumer prices might be a short-term one, Wang added.
Donna Kwok (郭浩庄), an economist for Greater China at HSBC Asia, said the rising trend in global energy prices, coupled with the impact of recent electricity price hikes, are also starting to affect consumer prices.
Fuel prices rose 11.09 percent last month, the DGBAS said.
Kwok maintained her view that the central bank would not adjust its policy rate, currently at 1.875 percent, when it holds its quarterly board meeting on Sept. 20.
“With inflationary pressures growing on the horizon, it is unlikely the ever-prudent central bank will move to cut already accommodative rates at its next meeting in three weeks’ time,” Kwok sad in a research note.
Inflation in the first eight months of the year rose 1.84 percent, still lower than the DGBAS’ full-year forecast of 1.93 percent.