The Ministry of Economic Affairs is in talks with retailers to establish “affordable areas” in stores to help counter the effect of inflation on consumers’ wallets, the ministry said yesterday.
The ministry would also help consumers find affordable food by promoting restaurants that have not increased prices, Minister of Economic Affairs Wang Mei-hua (王美花) told a legislative session in Taipei.
Asked by Democratic Progressive Party Legislator Ho Hsin-chun (何欣純) what the ministry is doing to lessen the effects of inflation on people’s wallets, Wang said: “Taiwan’s inflation is relatively mild compared with other countries. Next week, we will meet with hypermarkets, retailers and other outlets to discuss setting up affordable areas to make it easier for consumers to find items with stable prices.”
Photo: Wang Yi-sung, Taipei Times
Alhough Taiwan’s mild inflation is not caused by internal policy, but worldwide commodity price increases, Taiwanese feel it disproportionately because wages have not increased alongside prices, National Central University Research Center for Taiwan Economic Development director Dachrahn Wu (吳大任) told the Taipei Times by telephone yesterday.
“The US is seeing inflation of more than 6 percent now, whereas in Taiwan, we are still below 2 percent,” Wu said. “However, in the US wages have gone up alongside inflation, whereas in Taiwan, wages have been stagnant.”
Along with Taiwan’s high level of inequality, this means low-income households are especially vulnerable to the effects of inflation, he said.
Although central bank Governor Yang Chin-long (楊金龍) earlier this week described inflation in Taiwan as “transitory” and predicted that it would not exceed 2 percent, it would be hard to for Taiwan to control inflation if it is caused by external conditions, Wu said.
“The wholesale price index has been surging well past 10 percent since May,” Wu said. “Businesses have not been passing on the costs to consumers because of the softness of the COVID-19 economy, but if commodity prices — for example oil prices — continue to increase, businesses will not be able to absorb the costs indefinitely.”
The government is traditionally more “hands-on” with inflation than other countries, Wu said.
However, Wu doubts that the “affordable zones” would have a big effect.
“You cannot make retailers sell at a loss,” he said.
If inflation exceeds 2 percent, the central bank might have to step in with monetary measures or increase the interest rate, Wu said.
“It is a difficult choice, because a higher interest rate might also harm the have-nots in our society,” Wu said.
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