Taiwan’s consumer price index (CPI) rose 1.54 percent year-on-year last month, a modest acceleration from June’s 1.36 percent increase, yet remained comfortably below the central bank’s 2 percent inflation threshold for the third consecutive month, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The uptick was primarily driven by a sharp rise in food prices following weather-related disruptions.
Vegetable prices surged 15.87 percent from June after Typhoon Danas and sustained heavy rainfall disrupted agricultural supply chains, particularly in southern Taiwan.
Photo: Chen Kuan-bei, Taipei Times
On an annual basis, vegetable prices increased 5.72 percent — a relatively muted gain due to a high comparison base in July last year, DGBAS official Tsao Chih-hung (曹志弘) said.
Lingering supply constraints are likely to keep vegetable prices elevated through this month, although the overall impact on inflation might be contained by similar price spikes in August last year, which create a high base effect, Tsao said.
Prices for essential goods rose 1.79 percent year-on-year — the largest increase in 17 months — driven by a rebound in egg prices following an 18-month decline, alongside continued price increases for pork, chicken and bread.
The jump in egg prices was attributed to stronger demand, partly in response to higher vegetable prices, as well as supply disruptions caused by the storm, Tsao said.
Core CPI, a more reliable price gauge because it excludes food, energy and other volatile items, rose 1.7 percent, marking the 16th consecutive month below the 2 percent threshold, suggesting that broader inflationary pressures remain well contained, he said.
Asked about the inflationary implications of the 20 percent tariff the US is to impose on Taiwanese goods starting today, Tsao said the impact is expected to be limited.
The latest rate is well below the 32 percent initially proposed in April, he said, adding that global demand has already weakened, contributing to a broad decline in international commodity prices and easing import cost pressures.
The New Taiwan dollar’s appreciation against the US dollar has further helped mitigate imported inflation, Tsao said.
Meanwhile, the producer price index (PPI), a key indicator of upstream and wholesale costs, fell 6.44 percent year-on-year last month, widening from a revised 5.35 percent decline in June, the DGBAS said.
The drop reflects broad-based softness in global commodity prices, particularly across minerals, chemicals, metals and electronics, the agency said.
The stronger local currency also played a role in reinforcing deflationary pressures on input costs.
“Overall, ‘reciprocal’ tariffs can generate both inflationary and deflationary effects, but under current conditions, the deflationary impact is likely to outweigh,” Tsao said.
For the first seven months of the year, the CPI rose 1.87 percent from the same period last year, while the PPI declined 0.69 percent, the DGBAS said.
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