Consumer confidence slips over tax row, inflation

By Camaron Kao

The China Post–Consumer confidence in Taiwan declined for the first time this year in April amid mounting concerns over inflation and the stock gains tax, according to a monthly survey. The Consumer Confidence Index (CCI), compiled by the Research Center for Taiwan Economic Development at National Central University, stood at 78.92 points in April, down 2.34 points from the previous month.

“It marks the index’s first downward adjustment since the beginning of this year, with consumer confidence in the stock market showing the steepest fall,” said Dachrahn Wu (吳大任), the center’s director.

The benchmark index gauges consumer confidence in the stock market, household finances, durable goods, job opportunities, consumer prices and the general economic outlook over the next six months.

In the latest monthly survey, only the job market sub-index posted a marginal increase of 0.6 points, while the five other indicators fell from their March levels, Wu said.

Wu said the job market sub-index has improved for five consecutive months.

The stock market confidence sub-index shed 5.4 points to 59.1 points amid debate over government plans to begin imposing a stock gains tax on stock investments.

A director from the Taiwan Research Institute Dai Zhao-yang (戴肇洋) expected consumers to remain pessimistic over the stock market’s prospects in the months ahead, particularly if transaction volume shrinks further.

A combination of other factors such as global economic uncertainties, eurozone debt problems and downward adjustments of Taiwan’s 2012 economic growth rates by several local think tanks could also affect consumer confidence in the local stock market, Dai stated. The confidence sub-index on consumer prices posted the second sharpest drop of 3.3 points to 52.05 points, according to the center’s survey.

“The drop reflects rising consumer concerns about inflation after rises in fuel prices early this month and looming hikes in electricity rates from mid-May,” Fu Jen University Assistant Professor Liang Te-hsin (梁德馨) noted.

The confidence sub-indexes on household finances, durable goods and domestic economic outlook fell 3.2 points, 1.55 points and 1.1 points, respectively, according to the survey.