While Taiwan is enjoying steady economic growth thanks to stable exports and domestic investment, its consumer price index (CPI) is also increasing, due to rising prices for vegetables, fruit, meat, imported fuel and airfare.
Last week, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported that the CPI last month rose 2.63 percent year-on-year — the highest increase since March 2013. In the first nine months of this year, the index exceeded the government’s 2 percent target during four months, raising concerns of accelerated price pressure.
However, over the whole nine months, the CPI only rose 1.74 percent, and the DGBAS said that last month’s increase was mainly due to a higher comparison basis in the same month last year, as well as increased consumption related to the Mid-Autumn Festival holiday, implying a deceleration in the inflation reading’s increase.
As many daily necessities have become more expensive, the public has reason for concern. For example, among the costs that the government found most concerning, the prices of 17 essential household items last month soared 3.31 percent annually — the highest in three years — with the prices of pork, soy sauce, cooking oil and toothpaste rising more than 5 percent.
Core CPI — which excludes items with especially volatile prices, such as food and energy — showed a stronger-than-expected rise last month, gaining 1.74 percent from a year earlier, the biggest annual increase since March 2018.
As core CPI is a major gauge of inflationary risk and indicates trends in consumer prices, its continued increase after rising 1.24 percent in July and 1.32 percent in August suggests that inflationary risk is building and that price pressure is expanding to non-volatile consumer goods.
The rising energy costs in last month’s index signaled that Taiwan is experiencing the effects of imported inflation. The government should carefully monitor whether the upturn in domestic inflation persists or even gains traction.
Over the past few months, import prices have risen by about 20 percent annually — the highest in nearly 10 years — driven by soaring prices for raw materials. This signals that the government also needs to monitor import prices to better address inflationary pressure on consumer prices.
The government can attempt to rein in imported inflation by pushing up the value of the New Taiwan dollar or demanding that state-run companies — such as CPC Corp, Taiwan, or Taiwan Power Co — partly absorb cost increases.
However, household expenses for water, electricity, liquefied natural gas and liquefied petroleum gas only make up 20 percent of the CPI. The remaining 80 percent is directly or indirectly affected by international energy prices, with the degree of the impact depending on market competition, as well as supply and demand.
While efforts to reduce carbon emissions have countries worldwide shifting from coal to natural gas, soaring coal and natural gas prices in China and Europe have produced an electricity crisis, with high prices or insufficient supply. As crude oil, coal and natural gas are crucial to the global energy supply — accounting for 31 percent, 27 percent and 23 percent respectively, according to Bloomberg data — energy-stoked inflation could accelerate if supply cannot be significantly increased in the short term.
It remains to be seen whether the surge in energy prices will trigger a new global energy crisis, but to the global economy, the surge could be a “black swan” event — something that cannot be predicted, but has profound consequences on markets — with inflationary pressure worldwide reaching a critical mass and producing the most devastating black swan of the post-COVID-19 pandemic period.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of