Inflation rose 1.75 percent last month from a year earlier, the biggest jump in 17 months, driven by growing food and fuel costs, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
However, the inflationary gauge’s latest sprint would still allow the central bank room to keep its easy monetary policy in place in the short term, as it is below the 2 percent alarm.
“The consumer price index [CPI] grew at the fastest pace since March last year, as egg, meat and fruit costs increased significantly,” DGBAS Deputy Director Tsai Yu-tai (蔡鈺泰) said at a press conference.
The inflation reading was 1.64 percent in June and slowed 0.04 percent from a month earlier, the DGBAS report showed.
Core CPI, which is more reliable in tracking long-term inflationary trends after taking out volatile items such as vegetable and energy costs, stood at 1.54 percent, the report said.
The central bank has said core CPI values serve as better references when it considers policy rates.
Food prices, which account for about 25 percent of the overall CPI basket, rose 4.27 percent and raised the index by 1.1 percentage points last month, the report found.
Egg prices gained 18.9 percent, meat 12.51 percent and fruit 10.09 percent, the report showed.
YEARLY PROJECTION
The statistics agency expects CPI to rise 1.53 percent for the whole year from 0.79 percent last year. As of July, the index averages at 1.29 percent.
Utility and garment prices advanced 4.23 percent and 2.52 percent last month respectively from their year-ago levels, affirming a rising cost of living.
The wholesale price index (WPI), used to measure production costs, held relatively steady with a 0.81 percent gain last month, unchanged from the pace in June, the report said.
Oil and electricity price hikes more than offset price discounts for electronics and optical products, Tsai said.
In the first seven months, the wholesale price index rose 0.42 percent from the same period last year, the report said.
ANALYSTS’ OUTLOOK
Australia and New Zealand Banking Group Ltd (ANZ) expects the statistics agency to raise its CPI forecast to a range of between 1.7 percent and 1.8 percent for this year, as the economy has so far been stronger than it was last year.
ANZ adjusted upward its GDP growth forecast for Taiwan to 3.6 percent this year, from a previous estimate of 3.1 percent.
The gas explosions in Greater Kaohsiung last week poses downside risks to the prediction, but the government may spend more to facilitate reconstruction and ease any negative impact, ANZ said.
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