FORECAST:
Inflation is expected to ease slightly this month as international oil prices decline and the impact of the Dragon Boat Festival holiday fades, an official said

By Crystal Hsu / Staff reporter

Consumer prices rose to a 17-month high last month, as higher costs of fuel and airfares, as well as weather-related food disruptions, lifted inflation, although the government said overall price pressures remained moderate with no signs of imported inflation.

The consumer price index (CPI) rose 2.6 percent from a year earlier, the fastest since January last year, the Directorate-General of Budget, Accounting and Statistics (DGBAS, 主計總處) said yesterday.

The statistics agency attributed the increase mainly to a 19.45 percent jump in fuel prices, a 13.49 percent rise in international airfares, and higher costs for computers, dining out and housing.

Photo: CNA

“Overall price increases remain moderate and there is no imported inflation problem,” DGBAS official Tsao Chih-hung (曹志弘) said.

Inflation is expected to ease slightly this month as international oil prices decline and the impact of the Dragon Boat Festival holiday fades, Tsao said.

The latest reading accelerated from May’s 2.2 percent increase and marked the second straight month that inflation exceeded the central bank’s 2 percent target.

The transportation and communications category recorded the biggest increase among the seven major CPI groups, rising 4.14 percent year-on-year. Fuel prices remained significantly higher than a year earlier, despite domestic gasoline and diesel prices falling late last month after global crude prices retreated following a US-Iran memorandum of understanding over their war.

Higher fuel surcharges also pushed up international airfares, while vehicle parts and repair costs rose 3.59 percent, the DGBAS said.

Education and entertainment costs gained 3.6 percent, led by a 7.39 percent increase in computers, peripherals and software, the largest annual gain in 44 years.

However, the effect on overall inflation was limited due to the category’s relatively small weighting, the DGBAS said.

Tour package prices increased 5.08 percent.

Housing costs climbed 2.2 percent, with rent rising 1.78 percent. Gas prices, household management fees and electricity costs all increased more than 4 percent from a year earlier.

Food prices rose 1.78 percent, with vegetable prices surging 10.05 percent after heavy rainfall disrupted supplies, while the cost of dining out gained 3.02 percent.

Food inflation might face additional pressure this month, as an approaching typhoon threatens agricultural output and logistics, the agency said.

Core CPI, which excludes volatile food and energy prices, rose 2.45 percent last month, indicating that underlying price pressures remained relatively firm, the DGBAS said.

Meanwhile, the producer price index (PPI) jumped 15.1 percent year-on-year last month, driven by higher prices for petroleum and coal products, as well as electronics, chemicals, pharmaceuticals and electronic components, the agency said.

The sharp rise in PPI suggests manufacturers continue to face elevated input costs, raising concerns that some expenses could eventually be passed on to consumers, but the impact on consumer prices would require further monitoring, it said.

In the first six months of the year, CPI increased 1.7 percent from a year earlier, while PPI rose 6.41 percent.