Central Bank Raises CPI Growth Forecast to 1.93% for the Year, Import Inflation Pressure Controllable

(CNA) - The latest Consumer Price Index (CPI) released by the Directorate-General of Budget, Accounting and Statistics showed a year-on-year increase of 2.6% in June, the largest jump in 17 months, bringing inflation back into focus. The Central Bank stated that the CPI increase in the second quarter was indeed higher than expected, thus revising the full-year CPI growth forecast to 1.93%, but emphasized that import inflation pressure remains controllable.

The Central Bank is scheduled to deliver a special report to the Legislative Yuan's Finance Committee on July 9th regarding "The Central Bank's Mid-to-Long-Term Response Strategies and Policy Tools Amidst Multiple Risks in the Stock Market, Inflation, Exchange Rate, and Real Estate Market." The written report was released in advance today.

The Central Bank noted that in the second quarter of this year, Taiwan's CPI and core CPI year-on-year increases were 2.17% and 2.15% respectively, slightly higher than the 2.1% and 2.06% projected by the bank's board in June.

However, the Central Bank pointed out that with the government's supply-side measures to stabilize domestic prices, the average CPI year-on-year increase from January to June was 1.7%, indicating that the inflation situation remains mild. Even though the import price index rose by 23.07% year-on-year in June, most of this was reflected in related export prices, with relatively limited impact on the domestic market.

The Central Bank stated that considering recent international oil prices have fallen back to pre-Middle East war levels, it is expected that domestic oil product prices and related tourism and transportation service prices will gradually decrease. Inflation rates in the third and fourth quarters of this year should be controllable.

The Central Bank further indicated that assuming its forecasts for the third and fourth quarters remain unchanged, the full-year CPI and core CPI growth forecasts will be slightly revised upward from the 1.91% and 1.9% projected by the board in June to 1.93% and 1.92% respectively. Geopolitical risks and weather are the main uncertain factors affecting inflation trends, and the bank will closely monitor subsequent developments. (Editor: Lin Jia-xian) 1150708

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