The Consumer Price Index (CPI) gained 4.78 percent year on year last month, but showed signs of slowing down compared with July, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
A DGBAS report said milder increases in food and energy prices resulted in a drop from last month.
“The CPI stood at 107.14 in August, up 0.25 percent compared with July,” DGBAS section chief Wu Chao-ming (吳昭明) told a press briefing. “The seasonally adjusted index dropped 0.05 percent.”
Wu said the CPI figure remained high and that continued hikes in food and energy prices were responsible.
“Food and energy prices jumped 10.21 percent and 17.14 percent respectively last month, contributing about 77 percent to the CPI growth,” Wu said. “But the size of their expansion is less drastic, owing to falling fuel and raw material prices abroad.”
The average CPI increase for the year to last month was 4.25 percent, exceeding the agency’s forecast of 3.74 percent for the year.
The Wholesale Price Index (WPI) climbed 9.57 percent last month from a year ago, but dipped 0.94 percent compared with July, the report said.
Wu said the WPI number indicated that inflation had peaked in July and would gradually head down for the rest of the year.
“Corn, wheat and soybean prices, while still on the rise, have displayed a noticeable slowdown in the last few months, indicating that inflationary pressures have eased and commodity prices will be stable,” Wu said.
Wu said the core CPI backed this interpretation, as it saw a slight drop of 0.15 percent to 104.97 points last month, up 3.74 percent from last year, after excluding fuel, fruit and vegetable prices.
Analysts shared Wu’s cautious optimism.
Citi Investment Research economists Cheng Cheng-mount (鄭貞茂) and Tina Liao wrote in a note yesterday that the CPI was likely to decelerate further in the fourth quarter on lower commodity prices and limited consumer purchasing power.
“The falling core CPI showed that underlying inflation has probably peaked,” Cheng and Liao wrote in the note, which was issued after the release of the latest government data.
“We expect a weakening economic outlook and easing inflationary pressure will shift the government’s focus from fighting inflation to stimulating growth,” they said.
Citigroup, however, believes last month’s CPI is not low enough to persuade the central bank not to hike rates at its board meeting this month.
Cheng and Liao said they expected “one last 12.5 basis-point hike in this tightening cycle. But a pause would not come as a surprise to the markets.”
In related news, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday they would lower gasoline and diesel prices by NT$0.9 and NT$1 per liter respectively from today, to reflect a drop in international crude oil prices.
Additional reporting by Jerry Lin
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