Premier Sean Chen (陳冲) yesterday vowed to mitigate the anticipated rise in inflation caused by fuel and electricity price hikes, by adopting a package of anti-inflationary measures. These could possibly include adjusting interest rates and exchange rates, he said.
“Inflation is a normal economic phenomenon that has occurred throughout the history of human development. There are many ways in which the government can moderate inflationary pressures,” Chen said.
“Exchange rates and interest rates are both important measures. Meanwhile, governmental inspections of commodity prices can also help to maintain discipline in a market eclipsed by price manipulation,” he added.
Chen said the Executive Yuan has kept abreast of increases in commodity prices and has demanded that governmental agencies come up with measures to counter inflation in a reasonable and proportionate manner.
For example, the Ministry of Economic Affairs has increased the frequency of its inspections of consumer goods prices, from twice a month last month to six times a month now. This was aside from its comprehensive inspections twice a month and a weekly retail price survey, he said.
Amid a public outcry about rises in retail prices in the wake of increases in the price of gasoline and electricity, lawmakers yesterday continued to grill Chen on the issue during a legislative question-and-answer session. This came after a resolution adopted on Monday by lawmakers across party lines at the legislature’s Economics Committee.
The non-binding resolution called on the government to suspend the implementation of new electricity rates set to take effect on May 15.
One of the rationales behind the resolution was that the decision by the Ministry of Economic Affairs last week to raise electricity rates was illegitimate, because its proposed policy was not reviewed by the Executive Yuan’s Public Utility Rates Review Committee and it was not approved by the legislature.
Responding to Democratic Progressive Party Legislator Cheng Li-chiun (鄭麗君), Chen disputed the rationale, saying it was “past practice” because the Public Utility Rates Review Committee had been terminated in 1972.
Chen said he respected the resolution and would ask the ministry to evaluate the views of lawmakers from the perspective of legality, but added that the government will still go ahead with the electricity hikes the ministry proposed.
According to the ministry’s proposal, households that use less than 120 kilowatt-hours of electricity per month will see no increase in their bills.
Chinese Nationalist Party (KMT) Legislator Huang Chao-shun (黃昭順) suggested Chen raise the threshold from 120 kilowatt-hours to 300 kilowatt-hours per month.
Chen did not agree with the suggestion, because it could mean that Taiwan Power Co (Taipower) has to charge higher rates for other households, business and industrial consumers, he said, but he promised that the ministry would consider the proposal.
At separate setting yesterday, when asked by the press about the extent to which commodity price hikes associated with rises in fuel and electricity prices were deemed reasonable, Chen said it was a difficult question to which economists have not been able to provide answers for hundreds of years.
“It’s not that fluctuations of retail prices are bad. Over a long timeframe, an acceptable inflation rate is normal in society, but it has to be on a slow upward curve. No one likes to see rates of inflation on a steep upward curve,” he said.