“Imported inflation” has remained controllable, despite the war in the Middle East pushing up international energy prices, causing domestic consumer prices to rise, the central bank said.
The New Taiwan dollar’s appreciation against the US dollar has eased the impact on imported inflation, the central bank said in a report submitted to the Legislative Yuan on Friday ahead of a meeting of the legislature’s Finance Committee today.
Although import prices in Taiwan rose 4.31 percent in US dollar terms in the first three months of this year, the local currency’s year-on-year appreciation against the greenback during the same period helped to limit import price growth in NT dollar terms to 0.33 percent, indicating imported inflation did not spin out of control, it said.
Photo: Tyrone Siu, Reuters
Nevertheless, the US-Israel war against Iran had sent international crude oil prices and other commodity prices higher, adding upward risks to global inflation, the central bank said.
Since the war erupted at the end of February, global investors have moved their funds to US dollar-based assets for hedging purposes, pushing down the NT dollar by 1.5 percent against the greenback as of Friday, it said.
However, the NT dollar’s depreciation was moderate compared with losses sustained by other non-US dollar currencies, it added.
Citing the latest consumer price index (CPI) data, the central bank said that the CPI in the first quarter of this year rose 1.23 percent from a year earlier, below a 2 percent alert level set by the bank.
It added that on the back of the government’s price stabilization measures, local inflation remained mild.
Still, it said it remained cautious about how the conflicts in the Middle East could evolve.
The central bank said it would continue to monitor the war in the Middle East and adjust its monetary policy to stabilize exchange rates and mitigate the global impact of rising raw material prices.
Last month, the central bank raised its forecast for CPI to grow 1.8 percent this year, up 0.17 percentage points from its previous estimate in December last year, taking into account a crude oil price spike and the government’s price stabilization measures.
DBS Bank Ltd on Thursday revised its annual CPI growth forecast for Taiwan to 1.9 percent from 1.5 percent, based on a full-year average Brent oil price assumption of US$80 per barrel.
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