Three years ago, when the nation’s economy was facing heightened inflationary pressures driven by rising oil and food costs, the government was severely criticized over its measures to alleviate people’s financial pain. Good or bad, that year’s price pressure was later replaced by the US subprime mortgage problem and ensuing global financial crisis, and the public’s complaints against the government subsided accordingly.
This year, Taiwan, along with many Asian economies, is again facing higher consumer inflation, driven by a steady increase in food and energy prices. On Friday, a survey released by the Consumers’ Foundation showed that 60 percent of the 1,234 respondents said they felt strongly about the rise in commodity prices this year and about 57 percent of respondents said the government’s measures to deal with the price issue were insufficient.
So, is the government waiting for a global financial or economic crisis to come to its rescue again? It had better not.
The public has indeed been under increasing pressure from price rises recently, as the latest government data showed the average price of 16 key daily necessities — including flour, meat, eggs and vegetable oil — grew 3.6 percent year-on-year last month, compared with increases of 3.4 percent in March, 3.3 percent in February and 2.6 percent in January.
What’s more, growth in the core consumer price index (CPI) — which excludes vegetables, fruit and energy items — expanded slightly to 0.99 percent last month from a year ago, following an increase of 0.98 percent in March.
To help deal with inflation, the government is proposing a hike in civil servant pay and hoping that private-sector businesses will follow suit. The government has also lowered import tariffs on certain agricultural commodities and instructed the state-run oil refiner CPC Corp to partly absorb the rise in fuel costs to help stabilize prices, while the Fair Trade Commission has launched investigations to uncover unfair price increases.
However, the prices of oil and agricultural commodities are volatile and subject to global political turmoil and abnormal climatic phenomena like floods, droughts and storms. Against this backdrop, the central bank seems to have become more comfortable with watching the New Taiwan dollar appreciate as it seeks to contain inflation.
However, using a strong NT dollar to partially offset the gains in imported commodities has its limits, because this measure could harm the competitiveness of Taiwanese exports. Based on the central bank’s data, the NT dollar has appreciated by 5.5 percent against the US dollar so far this year, the largest rise among major Asian currencies. This compares with a 4.4 percent rise by the South Korean won.
The central bank has used interest rate adjustments to slow the price pressure over the past four quarters and it certainly should not surprise anyone if the central bank chooses another rate hike of 0.125 percentage points at next month’s quarterly board meeting. The problem is the central bank’s mild pace of rate hikes still lags behind the rising pace of commodity prices.
The impact of inflationary pressures driven by import costs is inescapable for Taiwan, as our economy is heavily dependent on imported industrial and agricultural raw materials. The government’s efforts to deal with price pressures, such as lower import tariffs, fuel subsidies and monetary policy adjustments, have been of limited effectiveness.
In fact, the most effective way to fight price pressure is for Taiwanese consumers to minimize their use of imported commodities, look for cost-efficient substitutes and carefully consider their options to cut costs. The government can help by making the market more fair and transparent as well as by better informing the public about the latest price changes.
Trying to force a partnership between Taiwan Semiconductor Manufacturing Co (TSMC) and Intel Corp would be a wildly complex ordeal. Already, the reported request from the Trump administration for TSMC to take a controlling stake in Intel’s US factories is facing valid questions about feasibility from all sides. Washington would likely not support a foreign company operating Intel’s domestic factories, Reuters reported — just look at how that is going over in the steel sector. Meanwhile, many in Taiwan are concerned about the company being forced to transfer its bleeding-edge tech capabilities and give up its strategic advantage. This is especially
US President Donald Trump’s second administration has gotten off to a fast start with a blizzard of initiatives focused on domestic commitments made during his campaign. His tariff-based approach to re-ordering global trade in a manner more favorable to the United States appears to be in its infancy, but the significant scale and scope are undeniable. That said, while China looms largest on the list of national security challenges, to date we have heard little from the administration, bar the 10 percent tariffs directed at China, on specific priorities vis-a-vis China. The Congressional hearings for President Trump’s cabinet have, so far,
US political scientist Francis Fukuyama, during an interview with the UK’s Times Radio, reacted to US President Donald Trump’s overturning of decades of US foreign policy by saying that “the chance for serious instability is very great.” That is something of an understatement. Fukuyama said that Trump’s apparent moves to expand US territory and that he “seems to be actively siding with” authoritarian states is concerning, not just for Europe, but also for Taiwan. He said that “if I were China I would see this as a golden opportunity” to annex Taiwan, and that every European country needs to think
For years, the use of insecure smart home appliances and other Internet-connected devices has resulted in personal data leaks. Many smart devices require users’ location, contact details or access to cameras and microphones to set up, which expose people’s personal information, but are unnecessary to use the product. As a result, data breaches and security incidents continue to emerge worldwide through smartphone apps, smart speakers, TVs, air fryers and robot vacuums. Last week, another major data breach was added to the list: Mars Hydro, a Chinese company that makes Internet of Things (IoT) devices such as LED grow lights and the
RSS