Consumer price index rises in August on food

The China Post news staff

Taiwan’s consumer price index (CPI) rose in August due largely to an increase in food prices, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported yesterday. The CPI in August was 106.4, a six-month high. The number represented a rise of 1.32 percent from July and 1.59 percent from the same period last year. Cumulatively, the average CPI from January to August amounted to a rise of 0.62 percent from the same period last year, the statistics bureau said. DGBAS attributed to the rise in August to a general price increase for various food products due to three typhoons that struck the island in early August, causing a supply shortage. Typhoons Pabuk, Wutip and Sepat caused about NT$1.78 billion in crop damages last month, the Council of Agriculture had reported earlier.

Food prices on average increased 5.64 percent, and an increase was especially noticeable in the prices of vegetables, fruits, fish, meat and eggs as supplies were cut short due to the typhoons, the DGBAS said. The increase in food prices, however, was slightly offset by a reduction in the price of clothes, as stores went on summer sale throughout the month of August. Overall, the price of clothes went down by 3.5 percent in August, the statistics bureau said. Meanwhile, the wholesale price index (WPI) for August was 125.38, a rise of 0.73 percent from July and 3.57 percent from the same period last year, DGBAS reported. The statistics bureau attributed the rise in WPI to a 0.48 percent depreciation in the New Taiwan dollar to the greenback in August, as well as an increase in the prices of agricultural, electronic and chemical products. The average WPI for January to August represented a rise of 6.25 percent from the same period last year, the bureau said. An increase in prices may trigger the central bank to raise interest rates. Taiwan’s central bank will hold its third-quarter board meeting to review interest rates and monetary policy on Sept. 20, Reuters reported yesterday, citing sources close to the central bank. At its last meeting in June, the central bank lifted its benchmark discount rate by 25 basis points to 3.125 percent, in its 12th straight rise aimed at narrowing the rate gap with the United States and lifting low real interest rates.

Taiwan started raising the discount rate — charged on loans from the central bank’s discount window and a benchmark for banks’ deposit and lending rates — in October 2004 from a record-low of 1.375 percent.