The nation’s consumer price index (CPI) gained 1.25 percent last month from the previous year, driven mainly by rising food costs as demand started to build up ahead of the Lunar New Year, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The inflationary gauge advanced for the fourth straight month last month, but the rate of growth slowed from 1.5 percent in November and was also even less than Deutsche Bank’s 1.4 percent increase prediction and HSBC’s 1.8 percent growth forecast.
DGBAS section chief Wu Chao-ming (吳昭明) attributed the weaker-than-expected CPI growth last month to retailers’ cautious attitude in passing cost burdens to consumers due to sharp competition.
“The price indexes for seven commodity categories all rose slightly year-on-year last month,” Wu told a media briefing.
Food costs posted the biggest increase at 2.17 percent, followed by medical insurance and entertainment expenses that picked up 1.35 percent and 1.17 percent respectively, DGBAS statistics showed.
Altogether, the CPI edged up 0.96 percent last year, lower than the 0.98 percent increase forecast by the statistics agency in November, indicating overall consumer prices were stable.
The CPI is expected to rise 1.85 percent this year, as US quantitative easing measures are likely to drive up energy and raw material prices further.
Crude oil prices jumped 19.7 percent year-on-year to US$88.56 a barrel last month, while cotton costs surged 91.5 percent to US$144.81, the report said.
Alan Liao (廖建中), an economist at Chinatrust Financial Holding Co (中信金控), said he was surprised at the moderate CPI reading and believed that the rising New Taiwan dollar helped ease inflation pressure. Liao had expected the CPI to rise 1.6 percent from a year earlier.
“The mild CPI reading would allow the central bank to normalize the interest rates in a gradual and slow fashion,” Liao said by telephone. “A rate hike of 12.5 basis points is likely to be seen each quarter this year.”
The core CPI, used to track long-term inflation trends as it excludes volatile energy, fruit and fishery product costs, rose 0.94 percent last month and averaged 0.44 percent last year, the report said.
The wholesale price index (WPI), used to measure production costs, gained 2.24 percent year-on-year last month as imported prices for chemical, basic metal and iron ore products remained high, the report said.
The NT dollar strengthened 5.36 percent against the greenback last month from its year-earlier level, fending off some imported inflation pressure, Wu said.
The WPI averaged 5.46 percent last year after the country emerged from the global financial crisis and is on track for a stable recovery next year.
Wu expects inflation pressure to accelerate this month as food, entertainment and transportation costs tend to rise ahead of the Lunar New Year holiday season.
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