Taiwan’s Consumer Price Index (CPI) grew by just 1.69% year-on-year in October, marking the slowest rate of inflation since April 2021, according to the Directorate General of Budget, Accounting and Statistics (DGBAS). The slow growth follows the dual impact of Typhoon Krathon, which caused agricultural damage, and the base effects from high prices during the same period last year.
Agricultural Losses and Price Fluctuations Push CPI
Although Typhoon Krathon struck Taiwan early in October, causing significant agricultural losses, particularly in fruit and vegetable production, the comparison base from last year played a role in dampening the overall inflation rate. Last year, several typhoons impacted Taiwan’s economy, driving up prices and making the current year’s increase seem more modest.
DGBAS specialist Tsao Chih-hung explained that the base effect from last year’s higher prices, coupled with the long National Day weekend in 2023, which drove up prices for entertainment and services, contributed to a relatively low CPI growth.
Egg Prices See Significant Decline
One of the notable changes in the CPI was the significant decline in the price of chicken eggs, which fell by an extraordinary 26.81% year-on-year—the sharpest drop in 24 years. Tsao explained that the drop was due to an oversupply of eggs, which exceeded demand, coupled with a higher comparison base from last year when egg prices were notably high.
Core CPI Remains Under Control, But Rising Costs in Key Areas
Excluding volatile categories like fruit and vegetables, the core CPI—which also excludes energy—rose by 1.64% in October, showing that underlying inflation remains relatively contained. However, rent and dining out costs continued to rise, increasing by 2.53% and 2.96%, respectively.
Despite the CPI staying under the 2% alert rate for the seventh consecutive month, the rising costs of essential services, such as housing and dining, are still felt by many households, leading to concerns about the real impact of inflation.
Outlook for November and Beyond: Typhoon Kong-rey’s Possible Impact
Looking ahead, Tsao noted that the arrival of Typhoon Kong-rey could potentially reverse the declining trend in the year-on-year CPI growth. The typhoon’s effects, particularly on agricultural production, could push up prices again. However, Tsao also pointed out that the upcoming autumn and winter seasons are generally favorable for vegetable production, which could help moderate price increases.
In terms of overall inflation, Tsao predicted that CPI growth in November would likely remain below 2%, barring unexpected shocks.
International Factors and Supply Chain Impacts on Inflation
Tsao also addressed questions about potential inflationary pressures from global events, such as the U.S. election. He noted that the immediate impact of such events on Taiwan’s inflation is often limited, as international raw material prices continue to be influenced more by supply and demand dynamics rather than political changes.
CPI Growth and Seasonal Changes: A Mixed Picture
In October, Taiwan’s CPI rose 0.25% month-on-month, with a seasonally adjusted increase of 0.11%. This rise was partly attributed to the arrival of new seasonal clothing and the ongoing effects of Typhoon Krathon. However, the end of the summer electricity rate cycle helped offset some of the increase in prices.
Table: Key Factors Impacting Taiwan’s October CPI Growth
| Factor | Impact on CPI | Details |
|---|---|---|
| Typhoon Krathon | Agricultural losses push up fruit and vegetable prices | Price increases due to storm damage |
| Comparison Base (Last Year) | Lower CPI growth in October 2023 | High prices last year make current rise appear lower |
| Egg Prices | Significant decline of 26.81% | Oversupply of eggs reduced prices significantly |
| Rent and Dining Out | Continued increase in living costs | Rent increased by 2.53%, dining out by 2.96% |
| Core CPI (Excluding Volatile Goods) | 1.64% increase | Stable, but rising costs in housing and dining |
| Typhoon Kong-rey | Potential to reverse CPI trend in November | Could push prices up, especially for agricultural goods |
Frequently Asked Questions (FAQs)
Q1: Why did Taiwan’s CPI growth slow down in October?
The lower CPI growth in October was mainly due to the high comparison base from last year, when multiple typhoons drove up prices, and the agricultural impact of Typhoon Krathon which offset price increases in some areas.
Q2: What caused the sharp decline in egg prices?
Egg prices saw a drastic 26.81% drop because the supply of eggs exceeded demand, alongside a higher comparison base from last year when egg prices were high.
Q3: How does Typhoon Kong-rey affect inflation?
Typhoon Kong-rey could lead to higher food prices, especially in agricultural products, potentially reversing the downward CPI trend seen in recent months.
Q4: What was the impact of the National Day long weekend on prices?
The long weekend for National Day 2023 led to higher demand for entertainment and services, which pushed up their prices and elevated the overall CPI.
Q5: Will Taiwan’s CPI growth exceed 2% in the coming months?
While CPI growth is expected to remain below 2% in November, any unexpected shocks, particularly from typhoons or international factors, could affect this forecast.
