Wed, Feb 07, 2024 page12

• CPI hits seven-month low below 2%

  HOLIDAY DISTORTION: Inflationary pressure could gain momentum this month as businesses traditionally raise prices amid increased demand over the Lunar New Year

  • By Crystal Hsu / Staff reporter
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  The consumer price index (CPI) for last month stood at 1.79 percent from a year earlier, dropping below the central bank’s 2 percent target as goods and services grew more expensive but at a mild pace, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

  The inflation reading represented the lowest in seven months, but the statistics agency attributed the slowdown mainly to the timing of the Lunar New Year, which fell in January last year, making for a higher comparison base.

  The CPI would have logged 2.4 percent in the absence of the holiday distortion, DGBAS official Tsao Chih-hung (曹志弘) said, suggesting that inflationary pressure could gain momentum this month when commercial establishments traditionally raise food and services charges to meet a pickup in demand over the Lunar New Year.

  

  People buy food and snacks for the Lunar New Year holiday in Taipei’s Dihua Street yesterday.

  Photo: CNA

  “People might feel the pinch more acutely,” since food costs, the largest chunk making up the index and an expense all consumers need to bear, advanced 4.1 percent, Tsao said.

  Fruit prices spiked 20.86 percent due to lingering disruptions from inclement weather, the official said. Meat prices were up 5.63 percent, while processed food items and dining out costs rose 4.31 percent and 4 percent each.

  By contrast, vegetable prices tumbled 14.54 percent year-on-year, as ample supply weighed on their value and helped mitigate overall food costs, Tsao said.

  Core CPI, a more reliable long-term price tracker because it strips volatile items, increased 1.64 percent, also well inside 2 percent territory, DGBAS data showed.

  Healthcare expenses advanced 3.12 percent on the back of copayment, treatment and drug price hikes, it said.

  Garment prices climbed 2.47 percent ahead of the holiday, while shelter costs grew a moderate 1.75 percent, propelled by continued increases in home repair, rent and electricity charges, the official said.

  Transportation and communications expenses inched up 0.51 percent and miscellaneous items squeezed a 0.3 percent rise, thanks to cheaper public transportation pass charges, as well as the favorable holiday effect, Tsao said.

  Education and entertainment costs, the main inflation drivers in the post-pandemic era, both remained low last month due to the holiday timing, but might stage a noticeable comeback later this month, the official said.

  Economists have said it is better to average the CPI data of the first two months to gain a better understanding of inflation trends and factor in holiday disruptions.

  Tsao said it is unlikely that the reading would slow below the 2 percent threshold.

  The producer price index, which measures price changes from a seller’s viewpoint, declined 0.46 percent, stagnant from a revised 0.47 percent retreat seen one month earlier, DGBAS said.

  Raw material, mineral and basic metal product prices weakened further as end-market demand remained soft, it said.
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