Taiwan's May CPI Rises 2.2%, Breaching Inflation Alert Level; Fuel Prices See Biggest Jump in 4.5 Years

(Central News Agency, reporter Zhao Minya, Taipei, June 5) The Directorate-General of Budget, Accounting and Statistics (DGBAS) announced today that the year-on-year increase in the Consumer Price Index (CPI) for May was 2.2%, breaching the 2% inflation alert level and hitting a nearly 14-month high. Fuel prices saw a particularly sharp rise of 20.09%, the largest increase in four and a half years. A DGBAS official stated that current price increases are moderate, adding, "There is currently no phenomenon of imported inflation in the country."

[CPI Mini Encyclopedia] The Consumer Price Index (CPI) reflects fluctuations in the price level of consumer goods and services purchased by general households. It can be used to measure inflation and serves as a reference for adjusting tax burdens, company and institutional salary adjustments, and contract prices. Source: DGBAS

DGBAS Specialist Cao Zhihong explained that the year-on-year increase in the May CPI expanded to 2.2%, up 0.47 percentage points from April. He attributed this to three main factors. First, due to weather effects and base period effects, vegetable prices rose by 9.69%, while the decline in fruit prices narrowed. Together, vegetables and fruits pushed up the CPI by approximately 0.15 percentage points.

Cao pointed out that the second factor was fuel prices. Affected by a low base from the previous year, and despite the government's price stabilization mechanism and a continued freeze on domestic gasoline and diesel prices in May, the increase still expanded, pushing up the CPI by about 0.12 percentage points. The third factor was the adjustment of fuel surcharges by national airlines, which led to increases in international airfares and overseas tour package prices, contributing about 0.13 percentage points.

Cao further stated that these three factors together pushed up the CPI by 0.4 percentage points. However, he noted that these items account for only 10% of the total basket, meaning the price increases for the other 90% of items were similar to those in April.

Looking at the seven major categories of the CPI, the Transportation and Communication category saw the most significant increase, rising 4%, the highest since June 2022. Within this category, fuel prices surged 20.09%, the largest increase in nearly four and a half years. Airfares rose by 10.37% due to the increase in fuel surcharges for international flights. Cao mentioned that the fuel surcharge for international passenger flights by national airlines will be reduced starting June 7, which is expected to narrow the increase in airfares.

The year-on-year increase in dining-out costs for May was 2.99%. Cao noted that while this is still below 3%, the month-on-month increase has exceeded 0.3% for three consecutive months, indicating a clear upward trend in dining-out prices that warrants continued monitoring.

[PPI Mini Encyclopedia] The Producer Price Index (PPI) reflects the price conditions of purchased goods in the production process. The index includes price information for three stages of production: raw materials, semi-finished products, and final products. Changes in the PPI help predict changes in overall prices and are often considered a leading indicator for the CPI.

Cao explained that the Import Price Index rose 22.33% year-on-year, the highest since July 1980. This was mainly driven by the impact of AI, with machinery, electrical equipment, television and video equipment, and their parts contributing 11.51 percentage points to the total index. Mineral products contributed 6.97 percentage points. The government has already implemented some stabilization mechanisms, and the impact on final consumer prices is expected to be limited.

Cao believes that current prices are rising moderately, stating, "There is currently no phenomenon of imported inflation in the country." Looking ahead, he noted that recent unstable weather could affect vegetable supply. Additionally, due to the base effect from the Dragon Boat Festival falling in late May last year but in June this year, the year-on-year CPI increase for June is expected to remain above 2% and could be slightly higher than in May. (Editor: Yang Kaixiang) 1150605

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