Executive Yuan: May CPI Increase Due to Base Effect, Not Imported Inflation

(Central News Agency, Taipei, June 8) The year-on-year increase in the May Consumer Price Index (CPI) was 2.2%, breaking through the 2% inflation warning line. Executive Yuan Vice Premier Cheng Li-chun stated at the "Project Meeting for Stabilizing Livelihoods in Response to the Middle East Conflict" on the 8th that the 2.2% year-on-year increase in the May CPI was influenced by factors such as the low comparison base for oil and vegetable prices last year, and is not imported inflation. Premier Cho Jung-tai instructed close monitoring of market changes.

The Directorate-General of Budget, Accounting and Statistics (DGBAS) announced on the 5th that the year-on-year increase in the May CPI was 2.2%, breaking through the 2% inflation warning line and hitting a new high in nearly 14 months. Among these, oil prices surged by 20.09%, the largest increase in four and a half years. The core CPI, excluding fruits, vegetables, and energy, increased by 2.12% year-on-year.

The Executive Yuan stated in a press release that Premier Cho Jung-tai chaired the "Project Meeting for Stabilizing Livelihoods in Response to the Middle East Conflict" on the 8th and heard relevant reports. Vice Premier Cheng Li-chun explained during the meeting that the 2.2% year-on-year increase in the May CPI, higher than April's 1.73%, was mainly due to the low comparison base for oil and vegetable prices last year, and was judged not to be caused by imported inflation.

Premier Cho pointed out during the meeting that the government's policy goal is to maintain an economic growth rate above 3% and keep the annual CPI increase below 2% to avoid the impact of price increases on people's livelihoods. Although the single-month CPI increase in May was relatively high, it was not due to imported inflation factors. The government will continue to closely monitor market changes and strive towards the goal of keeping the average annual CPI below 2% to maintain stable prices for people's livelihoods.

Regarding energy supply, Premier Cho said that the domestic supply of light oil is currently stable and sufficient, and inventories of oil and natural gas are both higher than the statutory safety stock. Schedules for natural gas shipments from June to August this year have also been arranged, and the winter natural gas procurement plan has been deployed in advance, with procurement for September to December ongoing.

Regarding gasoline and diesel prices, he stated that Taiwan currently maintains the lowest prices among neighboring Asian countries and has activated project-based price stabilization measures. Gasoline and diesel prices will remain unchanged this week. Except for a 5% price increase for industrial natural gas, prices for residential electricity, natural gas, and LPG (liquefied petroleum gas) cylinders will not be raised in June.

Premier Cho also mentioned that the government continues to implement transportation fare stabilization measures and maintain a freeze on fertilizer prices. To ensure the stability of medical material supply, the Ministry of Economic Affairs and the Ministry of Health and Welfare are collaborating across ministries to prioritize the supply of packaging materials and plastics needed for the production of pharmaceuticals and medical devices, strengthening the resilience of the medical supply chain. Prices of plastic medical materials have gradually stabilized. For example, the selling price of plastic suction catheters on domestic e-commerce platforms is similar to prices in Japan and South Korea and lower than prices in the US market.

Regarding the current steel market and steel prices, Premier Cho requested the Ministry of Economic Affairs and China Steel Corporation to continuously monitor market changes and related situations, and to propose specific response plans within one week. Regarding the increase in asphalt concrete prices in the eastern region, which has put pressure on private businesses and affected project progress, he also asked the Ministry of Economic Affairs and CPC Corporation to continue monitoring and reviewing for any unreasonable price increases and to propose effective measures to stabilize the supply of raw materials.