The consumer price index (CPI) rose 1.22 percent last month from a year earlier, but slowed from September’s year-on-year growth of 1.37 percent, as falling prices for consumer electronics mitigated increases in clothing and food costs, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The easing inflationary pressure would give the central bank a free hand to keep the benchmark discount rate steady at 1.875 percent, helping to spur economic growth, analysts said.
The inflationary measure gained 1.22 percent last month as winter garments started to hit the shelves once temperatures began to fall, lifting the clothing price sub-index 6.23 percent, DGBAS section chief Wang Shu-chuan (王淑娟) told a media briefing.
Retailers tend to price clothing higher at the beginning of a new season and offer discounts once that season comes to an end.
Headline CPI edged up a mere 0.5 percent last month compared with September, and after seasonal adjustment, the increase dropped to 0.02 percent, the DGBAS report showed.
Food costs, which account for 24 percent of the index’s weight, saw a modest 1.02 percent increase year-on-year last month as egg prices picked up 25.43 percent, followed by dairy products at 5.99 percent, the report said.
However, a strong harvest pushed down vegetable prices 14.77 percent, keeping the food index relatively stable, the report said.
Transportation costs climbed 0.76 percent last month from a year earlier on rising oil prices, which more than offset telecommunication rate discounts, the report said.
OPEC crude oil cost US$106.29 a barrel last month, increasing 33.1 percent from the same period last year, the report showed.
Core CPI, used to track the long-term inflationary trend by excluding energy, vegetables and other volatile goods, accelerated to near a two-year high at 1.49 percent last month, reflecting mild, but steady increases in food costs, the report found.
The price increase would be most evident for people who often eat out as their food prices rose 2 percent last month, while prices for drinks picked up 2.8 percent, the report said.
The increases were likely contained because retailers offered temporary discounts to ease the pain of price adjustments last month, Wang said.
The wholesale price index, an indicator of production costs, rose 5.93 percent last month from a year earlier, accelerating for the third straight month, as raw material prices continued to rise, the report said.
Laura Chen (陳若昕), an economist at SinoPac Financial Holdings Co (永豐金控), expects the CPI to climb higher toward the end of this year as cold weather drives up demand for fuel.
The mild inflationary pressure would allow the central bank to focus on the economic front and stand by existing interest rates to stimulate growth, Chen said.
Tony Phoo (符銘財), a Taipei-based economist at Standard Chartered Bank, agreed, saying that the steadily rising core CPI would make more aggressive action unwarranted.
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