The consumer price index (CPI) increased at a slower annual pace last month, gaining 2.02 percent, while the core CPI rose 2.57 percent year-on-year after volatile items were excluded, as inflationary pressures stabilized, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The inflation readings remained above the 2 percent target for the 22nd month in a row, but the month-on-month slowdown could give the central bank reason to halt interest rate hikes later this month to support the economy.
“Advances in entertainment and dining out charges, as well as rent rates continued to drive up the CPI, even though international oil and raw material prices contracted amid global economic uncertainty,” DGBAS official Tsao Chih-hung (曹志弘) told an online news briefing.
Photo: CNA
The headline inflationary gauge declined 0.07 percent from a month earlier and shed 0.11 percent after seasonal adjustments, Tsao said, adding that it would likely pick up slightly this month due to the Dragon Boat Festival.
Central bank Governor Yang Chin-long (楊金龍) earlier told a hearing at the Legislative Yuan that the central bank would raise interest rates again this month if the core CPI, a more reliable long-term price tracker, continued to rise.
The core reading rose 2.72 percent year-on-year in April on the back of the Tomb Sweeping Day break, but slowed to 2.57 percent last month, enabling the central bank to put policy rate increases on hold.
The central bank said it would also factor in monetary moves by major economies to address repercussions related to interest rate differences.
Last month’s CPI data suggest that inflationary pressures lingered, especially for frequently purchased items, which account for a bigger share of low-income households’ purchases, Tsao said.
Education and entertainment overtook food as the biggest CPI driver with a 3.01 percent increase, as people resumed normal activities after COVID-19 restrictions, he said, adding that price hikes for services are unlikely to drop even when things become more affordable.
Food costs rose 2.96 percent, as egg, meat, cooking oil and grain prices increased noticeably, muting declines in vegetable and fruit prices amid stable supply, Tsao said.
Prices of miscellaneous items rose 2.69 percent as employers increased the wages of foreign domestic helpers and care workers, he said.
The producer price index (PPI), which measures price changes from the seller’s perspective, contracted 3.75 percent following a revised 2.24 percent fall in April, after demand for oil, coal and base metal products dropped, in line with poor economic showings, Tsao said.
In the first five months of the year, the CPI grew 2.44 percent, while the PPI grew a fractional 0.67 percent, DGBAS data showed.
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