Wed, May 08, 2024 page12

• CPI falls back to central bank target

  • By Crystal Hsu / Staff reporter
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  The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

  The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1.

  “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei.

  

  People shop at Chengde Market in Taipei’s Nangang District yesterday. The consumer price index grew 1.95 percent year-on-year last month, the Directorate-General of Budget, Accounting and Statistics said yesterday.

  Photo: CNA

  The central bank in March raised interest rates by 0.125 percentage points in what board members called a pre-emptive and appropriate attempt to curb inflation expectations that could run wild following the across-the-board electricity rate adjustments.

  That did not happen, despite shelter costs rising 2.07 percent on the back of a 4.48 percent increase in electricity rates and a 2.34 percent gain in rents, the agency’s monthly survey found.

  The electricity rate hikes did not prompt businesses to follow suit. Rather, a “revenge consumption” trend has mitigated, nearly two years after the lifting of COVID-19 restrictions.

  Electricity rates would rise again in the summer from June to September, Tsao said.

  Education and entertainment prices rose 1.58 percent, the smallest increase among major consumption categories, although demand for cross-border travel remained robust, he said, adding that after-school tutor fees rose 3.64 percent.

  Food costs, the largest category by weighting, climbed 2.58 percent, as fruit and vegetable prices, and the cost of dining out rose 4.28 percent, 2.19 percent and 2.93 percent respectively, he said.

  However, prices for 17 frequently purchased items declined for the first time in four years, while an unfavorable comparison base effect linked to soaring egg prices last year faded, he said.

  Healthcare costs and medical product prices outpaced other consumption categories with a 3.52 percent rise after medical facilities raised registration fees, as well as drug and copayment charges, the survey showed.

  Core CPI, a more reliable long-term price tracker because it excludes volatile items, posted a more benign 1.81 percent increase, the official said, affirming stable consumer prices.

  The producer price index (PPI), which measures price movements from a seller’s perspective, accelerated 2.06 percent year-on-year, from a revised 0.49 percent gain in March, as international fuel and gasoline prices became more expensive and a weaker local currency made the price differences more apparent, DGBAS said, adding that cheaper poultry and base metal products helped soften the growth.

  In the first four months, the CPI advanced 2.24 percent, while the PPI rose at a milder pace of 2.12 percent.
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