The Directorate-General of Budget, Accounting and Statistics said last month that the nation did not face the risk of imminent inflation, adding that it expected the consumer price index to rise by a modest 2 percent this year from last year on the back of rising food and fuel prices. The economy will expand 4.92 percent this year from last year, which is seen as healthy growth, the agency forecast.
However, those figures do not show everything, and economic growth does not mean an end to austerity.
People have been feeling the pinch recently as the price of everyday necessities has outpaced any increase in their salaries. The price of instant noodles, for example, jumped between 10 percent and 15 percent at the beginning of this month, with food manufacturers blaming the nonstop rise in global wheat prices. The price of wheat, going up worldwide because of unfavorable weather, and other basic food commodities like sugar have pushed food manufacturers’ costs higher than they can absorb, so they are passing some of the losses on to consumers.
Commodity price increases have been much faster than wage hikes — between 5 percent and 10 percent — enjoyed by some employees in selected sectors such as the technology industry, which is expected to post better profits this year on the back of recovering demand for electronic products.
Another factor is the spike in global crude oil prices to about US$115 per barrel last week, up 20 percent since the beginning of this year, which is threatening to jack transportation costs up and thereby consumer prices.
People are pinning their hopes on the government to help them better manage their budgets by adopting policies that will drive down consumer prices, especially for basic necessities.
However, the government’s lack of efficiency and flexibility are disappointing. Premier Wu Den-yih (吳敦義) even gave some ridiculous advice on how to save money.
“Use less sugar when having coffee,” Wu told legislators when asked how the government would react to the persistent rise in food prices. “It will be good for your health, too.”
Wu also told legislators that the government was stepping up raids on illegal food and commodities hoarding to curb price increases. This shows that the government has totally missed the point, because the recent price hikes are a global trend that have resulted in the hoarding of goods, not the other way around.
Last month, the government halved import tariffs on grains, including wheat and corn, for the next six months. Meanwhile, Japan and South Korea have scrapped tariffs on imported wheat and corn entirely for 12 months. They have also decided to increase their stockpiles of rice and cooperate with other nations to expand crop areas.
To help alleviate mounting price pressures, Wu last week said the government would consider resuming subsidies to the transportation sector or instruct state-run oil refiner CPC Corp, Taiwan to pass less of the price hike in imported oil prices on to consumers. However, the retail price of gasoline has climbed to more than a two-year high, and no attempt has been made to stop this trend.
As most Asian countries are beefing up their efforts to tame inflation via subsidies and collaboration with other countries, the government should take action now, before inflation runs out of control because Taiwan is heavily reliant on imported commodities and oil.
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