Taiwan’s inflation rate will approach 3 percent if the new government simultaneously raises gasoline and electricity prices, the country’s top economic planner said on Friday.
“The domestic consumer price index [CPI] could register an annual increase of nearly 3 percent this year if the new government to be sworn in on May 20 opts to raise electricity and fuel prices in one ‘lump sum’ move,” said Ho Mei-yueh (何美玥), chairwoman of the Council for Economic Planning and Development (CEPD).
Speaking in an interview with several local media outlets, Ho said the incumbent Democratic Progressive Party administration has consistently followed several principles in addressing fuel and utility pricing issues, including operating costs, corporate finances, market mechanisms and rate segmentation depending on the customer.
Nevertheless, Ho said that in the wake of recent sharp spikes in international commodity prices, domestic fuel and electricity price adjustments could no longer be based simply on raw material costs.
“Both the domestic and global macroeconomic situations should be factored in while formulating fuel and utility pricing policy, “ Ho said, adding that finding an opportune time and drafting complementary measures were extremely important in deciding whether to adjust gasoline and electricity prices.
State-run oil refiner CPC Corp, Taiwan (台灣中油) has proposed raising its product prices by NT$2.8 per liter from next month and another state-run enterprise Taiwan Power Co (台電) also plans to raise electricity prices by NT$0.65 per kilowatt hour from next month.
Should the two price hike plans be adopted and the local currency’s exchange rate against the greenback stay at NT$30 until the end of the year, inflation would rise more than 1 percentage point to around 3 percent, Ho said.
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