Annual growth in the consumer price index (CPI) decelerated for the third straight month to 2.39 percent last month, prompting the Directorate-General of Budget, Accounting and Statistics (DGBAS) to declare yesterday that inflationary pressures had been defused.
The inflationary indicator, once the government’s top concern after it hit a 14-year high of 5.91 percent in July, has since trended down thanks to falling fuel and raw material prices.
“The CPI rose 2.39 percent year-on-year last month, owing primarily to steep rises in vegetable and fruit prices in the wake of Typhoon Jangmi,” Wu Chao-ming (吳昭明), a DGBAS section, said yesterday.
“However, the growth rate slowed for the third consecutive month, clearing concerns about inflation.,” Wu said.
The latest CPI figure marked the lowest since September last year, slowing from 4.78 percent in August and 3.09 percent in September, Wu said.
He attributed the downshift to slumping fuel and raw material prices, with crude oil costs plunging to US$71 a barrel earlier this week from US$145 in July.
Food costs topped the price hikes last month, up 5.53 percent from last year, Wu said, adding that vegetable prices surged 49.95 percent after Jangmi struck Taiwan at the end of September.
However, transportation costs were down 0.76 percent year-on-year mainly because of a 6.01 percent drop in oil prices, according to the DGBAS report, which put the average CPI for the first 10 months of this year at 3.92 percent, higher than the annual growth forecast of 3.74 percent.
Core CPI, which is used to gauge long-term consumer prices as the index excludes energy, fruit and vegetable prices, increased a mere 0.55 percent last month, the lowest since March 2004.
For the first 10 months of the year, core CPI advanced 3.23 percent from a year ago, the report said.
The wholesale price index last month declined 3.22 percent from September but gained 2.43 percent from a year ago, Wu said, noting that mineral, coal, and metal prices remained high.
“The figures all lent support to slowing inflation after speculators exited global commodity markets,” Wu said.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), agreed that the specter of inflation had lifted and the government would now focus on curbing the impact of the global financial storm as well as stimulating economic growth at home.
To that end, Liang said that the central bank was likely to continue its loose monetary policy and cut key interest rates after its regular board meeting late next month or once its US counterpart takes the move in the middle of next month.
Liang put the scale of the next rate cut at 25 basis points.
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