Taipei, Taiwan – Taiwan’s consumer price index (CPI) experienced a significant rise in November 2024, increasing by 2.08% year-on-year, mainly attributed to the surge in vegetable prices caused by the aftermath of several typhoons, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported on Thursday.
This increase marked the highest year-on-year CPI growth in nearly two years, exceeding the 2% threshold set by Taiwan’s Central Bank. The surge in vegetable prices played a major role in pushing the November CPI beyond the alert line, prompting concerns about inflationary pressures.
Vegetable Prices Surge Due to Typhoon Impact
According to Tsao Chih-hung (曹志弘), a specialist at the DGBAS, the rise in vegetable prices, which surged by 19.43% from a year earlier in November, was largely driven by the agricultural losses incurred from the recent typhoons. These extreme weather events disrupted local farming, leading to higher prices for essential produce.
The combined price increase in fruit and vegetables alone accounted for 0.52 percentage points of the overall CPI increase, which significantly impacted the index for November. Taiwan’s agricultural sector has been grappling with extreme weather conditions, including typhoons, which have led to not only an increase in vegetable prices but also disruptions in food production chains.
Core CPI Growth Shows Stable Price Trends
The core CPI, which excludes volatile items like fruit, vegetables, and energy, saw a more moderate increase of 1.74% in November, reflecting relatively stable prices for most other goods. This suggests that, despite the spike in food prices, the overall cost of living remains under control, with core inflation remaining below the critical 2% threshold.
Interestingly, while inflationary pressures from food prices were significant, other goods and services experienced less dramatic changes. For instance, prices for medical care, education, rent, and vehicle parts saw increases of 4.46%, 2.87%, 2.66%, and 2.58%, respectively. These sectors, along with dining-out costs, contributed to the overall CPI increase but remained within manageable limits.
Dining-Out Costs See Highest Increase in 8 Months
Another notable development was the rise in dining-out costs, which increased by 3.06% year-on-year, marking the highest increase in eight months. While this figure exceeded 3%, it was consistent with the trend of the past several months, which recorded increases of 2.96% and 2.98% in the preceding months. This suggests a gradual but steady rise in food and beverage prices, primarily influenced by supply chain issues and inflation.
Household Necessities Show Stability
In contrast to the sharp increases in certain categories, the cost of essential household items showed some stability. The price of a basket of 17 government-monitored household necessities, including items like rice, pork, bread, eggs, sugar, cooking oil, instant noodles, and basic toiletries, decreased by 0.2% year-on-year in November. This drop indicates that the prices of some staple goods have remained relatively stable despite the uptick in other areas.
Housing Prices Continue to Rise
The cost of housing rent also continued its upward trajectory, with an annual increase of 2.66% in November. This increase in rental prices, which marked the highest annual growth in 28 years, is expected to continue due to factors like rising housing prices and higher interest rates. Despite the increase, experts suggest that rental inflation will likely stabilize in the coming months, as the growth rate in rental prices has been gradually steady since mid-2022.
Table: Key Price Changes in Taiwan’s CPI for November 2024
| Category | Year-on-Year Change | Main Drivers |
|---|---|---|
| Vegetables | +19.43% | Typhoon damage, agricultural losses |
| Dining-out costs | +3.06% | Increased food prices, supply chain disruptions |
| Core CPI (excluding food & energy) | +1.74% | General price stability in most other sectors |
| Medical care | +4.46% | Increased healthcare service costs |
| Education | +2.87% | Tuition fees, educational material prices |
| Rent (housing) | +2.66% | Rising property prices, higher interest rates |
| Household necessities | -0.2% | Stable prices in staple goods |
What Does This Mean for Taiwan’s Economy?
The surge in Taiwan’s CPI growth in November, driven primarily by vegetable price hikes, signals the continued vulnerability of the economy to natural disasters and supply chain disruptions. However, the overall trend for core inflation remains manageable, suggesting that Taiwan’s economy is not experiencing runaway inflation.
Experts are cautious about the future, as rising housing and living costs could place pressure on consumers, especially in light of the ongoing global economic challenges and the typhoon season’s impact on agriculture.
Taiwan’s central bank may take this inflationary trend into consideration when adjusting monetary policy in the coming months, especially if CPI growth continues to exceed 2%.
Frequently Asked Questions (FAQs)
1. What caused the increase in Taiwan’s CPI in November?
The increase in the Consumer Price Index (CPI) was mainly due to higher vegetable prices, which were affected by agricultural losses caused by recent typhoons. The price of vegetables surged by 19.43% compared to the previous year.
2. How did dining-out costs contribute to the CPI growth?
Dining-out costs rose by 3.06% year-on-year, marking the highest increase in eight months. While this increase was notable, it followed a steady trend from the preceding months.
3. Did the cost of household necessities increase in November?
No, the cost of a basket of 17 government-monitored household necessities dropped by 0.2% year-on-year, indicating stability in essential goods like rice, eggs, and bread.
4. How did housing rent prices change in November?
Rent prices increased by 2.66%, marking the highest increase in 28 years. This rise reflects the ongoing trends of rising housing prices and higher interest rates.
5. Will inflation continue to rise in Taiwan in the coming months?
While there is pressure from specific sectors like vegetables and housing, core inflation has remained below the 2% alert. However, if typhoon impacts continue or global inflationary trends persist, further price increases may occur.
