June CPI Up 2.6% Year-on-Year, a 17-Month High; July Expected to Remain Above Inflation Alert Line

(CNA) - The Directorate-General of Budget, Accounting and Statistics (DGBAS) announced today that the Consumer Price Index (CPI) in June rose by 2.6% year-on-year, marking the second consecutive month above the 2% inflation alert line and reaching the highest level in 17 months. DGBAS officials explained that in addition to the Dragon Boat Festival effect, high oil prices and unstable weather affecting fruit and vegetable prices were significant factors.

DGBAS statistics show that the year-on-year CPI increase in June was 2.6%, and the core CPI, excluding fruits, vegetables, and energy, rose by 2.45% year-on-year. Both figures widened from May.

Cao Zhi-hong, a DGBAS specialist, explained that June coincided with the Dragon Boat Festival, leading to price increases in entertainment expenses and gift-giving for some services. Furthermore, vegetables were affected by heavy rainfall, resulting in a 10.5% price increase due to reduced supply, which also pushed up the overall inflation rate.

Cao Zhi-hong further pointed out that although domestic gasoline and diesel prices were adjusted downwards in late June following international market trends, fuel costs still saw a significant increase of 19.45%. Airfare also rose by 13.49% due to increased international route fuel surcharges. The impact of the US-Iran conflict on international energy prices also contributed to the rise in prices.

The DGBAS's latest forecast, released at the end of May, estimated the CPI increase for the second quarter of this year at 2.04%. However, according to today's latest price statistics, the CPI increase for the second quarter was 2.17%, exceeding the forecast.

Cao Zhi-hong stated that this was mainly due to weather factors, with unstable weather in June causing agricultural losses and leading to a larger increase in agricultural product prices.

Looking ahead to July, Cao Zhi-hong analyzed that the impact of heavy rainfall in June might have a delayed effect, and a typhoon in early July is expected to cause a larger increase in vegetable prices and a smaller decrease in fruit prices, both pushing up the CPI. However, the disappearance of the Dragon Boat Festival effect will offset some of the upward pressure, and the CPI increase in July should be slightly lower than in June, but still above 2%.

When asked by the media whether the CPI remaining above the inflation alert line for two consecutive months signifies escalating inflationary pressure, Cao Zhi-hong responded that according to international definitions, inflation is a sustained, widespread, and significant increase, meaning "most things are rising, and the increase is substantial." He stated that Taiwan is not in such a situation, and price increases are still moderate.

Cao Zhi-hong added that when discussing price situations, it is important to also observe wage levels. If nominal wage increases are greater than price increases, real wages are still growing, and there is no need to worry too much even if prices rise. (Editor: Lin Shu-yuan) 1150707

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