The consumer price index (CPI) next year would rise above the 2 percent alert, and not decelerate as other institutes have forecast, because producers and retailers would pass mounting cost burdens on to customers, Academia Sinica said yesterday.
The inflationary gauge would be 2.04 percent next year, compared with 2.01 percent this year, as companies would boost selling prices to reflect rising costs, with the spillover effect extending to end consumers, Academia Sinica research fellow Ray Chou (周雨田) told an online news conference.
Academia Sinica is the only economic research institute in Taiwan to have forecast domestic inflation of more than 2 percent next year.
Photo: CNA
Persistently high wholesale price index readings support the view, Chou said, adding that other institutes fail to factor in housing price hikes, which would help drive up rent.
“Supply chain bottlenecks would linger and deteriorate, heaping inflation pressures on goods amid the rapid spread of virus infections caused by the Omicron variant” of SARS-CoV-2, Chou said.
Countries around the world have tightened border controls and bolstered disease containment measures as cases escalate and threaten medical capacity, he said.
Taiwanese policymakers continue to paint above-par CPI readings as transient and attributable to a low comparison base last year, he said.
They insist that things will normalize next year, even though the US Federal Reserve and the Bank of England have recognized that inflation merits monetary policy responses, he said.
Academia Sinica said that increasing home prices and payrolls would prompt landlords to raise rents.
Directorate-General of Budget, Accounting and Statistics (DGBAS) data have already showed upticks in rent rates in the past few months, it said.
A survey by Evertrust Rehouse Co (永慶房屋) found that house prices nationwide picked up by double percentage digits this quarter.
Developers have said they have to adjust prices to reflect spikes in labor, building material and land costs, while tile producer Champion Building Materials Co (冠軍建材) on Tuesday said that it would increase its prices by 8 to 15 percent.
Several restaurants and hotels, as well as manufacturers, have said that they had to take similar steps to remain profitable.
A CPI of more than 2 percent would not be all bad news, as it would foster economic expansion, Chou said.
A CPI growth figure near 1 percent would raise concerns about deflation, he said.
If the world can quickly gain control over Omicron outbreaks, uncertainty would subside, he said.
Academia Sinica projected that GDP growth would moderate to 3.85 percent next year, from an estimated 6.04 percent this year, due to a high comparison base this year.
The 3.85 percent projection is a conservative estimate compared with the 4.15 percent forecast by the DGBAS and the central bank’s 4.03 percent, while the latest GDP growth forecasts by major domestic think tanks were all above 4 percent.
Additional reporting by CNA
Taiwan is projected to lose a working-age population of about 6.67 million people in two waves of retirement in the coming years, as the nation confronts accelerating demographic decline and a shortage of younger workers to take their place, the Ministry of the Interior said. Taiwan experienced its largest baby boom between 1958 and 1966, when the population grew by 3.78 million, followed by a second surge of 2.89 million between 1976 and 1982, ministry data showed. In 2023, the first of those baby boom generations — those born in the late 1950s and early 1960s — began to enter retirement, triggering
ECONOMIC BOOST: Should the more than 23 million people eligible for the NT$10,000 handouts spend them the same way as in 2023, GDP could rise 0.5 percent, an official said Universal cash handouts of NT$10,000 (US$330) are to be disbursed late next month at the earliest — including to permanent residents and foreign residents married to Taiwanese — pending legislative approval, the Ministry of Finance said yesterday. The Executive Yuan yesterday approved the Special Act for Strengthening Economic, Social and National Security Resilience in Response to International Circumstances (因應國際情勢強化經濟社會及民生國安韌性特別條例). The NT$550 billion special budget includes NT$236 billion for the cash handouts, plus an additional NT$20 billion set aside as reserve funds, expected to be used to support industries. Handouts might begin one month after the bill is promulgated and would be completed within
NO CHANGE: The TRA makes clear that the US does not consider the status of Taiwan to have been determined by WWII-era documents, a former AIT deputy director said The American Institute in Taiwan’s (AIT) comments that World War-II era documents do not determine Taiwan’s political status accurately conveyed the US’ stance, the US Department of State said. An AIT spokesperson on Saturday said that a Chinese official mischaracterized World War II-era documents as stating that Taiwan was ceded to the China. The remarks from the US’ de facto embassy in Taiwan drew criticism from the Ma Ying-jeou Foundation, whose director said the comments put Taiwan in danger. The Chinese-language United Daily News yesterday reported that a US State Department spokesperson confirmed the AIT’s position. They added that the US would continue to
IMPORTANT BACKER: China seeks to expel US influence from the Indo-Pacific region and supplant Washington as the global leader, MAC Minister Chiu Chui-cheng said China is preparing for war to seize Taiwan, Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said in Washington on Friday, warning that Taiwan’s fall would trigger a regional “domino effect” endangering US security. In a speech titled “Maintaining the Peaceful and Stable Status Quo Across the Taiwan Strait is in Line with the Shared Interests of Taiwan and the United States,” Chiu said Taiwan’s strategic importance is “closely tied” to US interests. Geopolitically, Taiwan sits in a “core position” in the first island chain — an arc stretching from Japan, through Taiwan and the Philippines, to Borneo, which is shared by
RSS