March CPI Rises 1.2% YoY; April Forecast Shows Significant Increase Due to Deferred Oil Price Hikes
Taiwan's March CPI rose 1.2% YoY, lower than anticipated due to government measures and a high base effect for fruits, despite global oil price hikes. A significant increase in April CPI is expected due to deferred oil price impacts and other rising costs.
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The Middle East conflict at the end of February, causing international oil prices to surge above $100 per barrel, raised inflation concerns. However, the Directorate-General of Budget, Accounting and Statistics (DGBAS) announced today that March CPI increased by only 1.2% year-on-year. Excluding the Lunar New Year effect, this marks a nearly five-year low.
International oil prices soared, with the average price of OPEC crude oil reaching $116.36 per barrel in March, a 57.2% annual increase. However, domestic prices remained stable, with oil fees even decreasing by 0.33% year-on-year.
Cao Zhihong, Director of Statistics at the DGBAS, explained that the March CPI increase was not significantly impacted by the Middle East conflict due to two main factors: first, the government's corresponding price stabilization measures against rising energy prices caused by the conflict; second, stable recent weather conditions led to increased fruit supply, and compared to the high fruit prices of the first half of last year, the high base effect caused fruit prices to drop by 23.32%, which alone impacted the overall CPI by 0.61 percentage points.
Cao Zhihong added that if we observe the price of CPC's 95 unleaded gasoline, the average price in March last year was NT$30.77, while in March this year it was NT$30.64. This means that after the government's special stabilization mechanism and expanded tax reduction in response to the US-Iran conflict, the oil fee price in March this year was lower than the same period last year, resulting in a negative impact on the CPI.
Cao Zhihong further explained that although OPEC oil prices increased by over 70% month-on-month in March, under the government's stabilization mechanism, the CPI oil fee only rose by 6.49% compared to February, meaning the domestic oil fee increase was only 9% of the international oil price increase, significantly smaller than the international oil price rise and even lower than the same period last year.
Despite stable prices in March, Cao Zhihong pointed out that after the government absorbed part of the increase, CPC's 95 unleaded gasoline price at the end of March was NT$33.9. Even if oil prices are frozen in April and remain at NT$33.9, this will still represent a 10% increase compared to the average price in March, impacting the CPI by 0.22 percentage points.
Cao Zhihong frankly stated, "Don't think March was so low; the increases are reflected in April." Besides the deferred oil price increases, international fuel surcharges and international airfares significantly increased in April, which will have a major impact.
Cao Zhihong also noted that dining-out expenses, closely related to people's livelihoods, also saw a significant month-on-month increase in March, and it needs to be monitored whether this is a short-term phenomenon or a spillover effect from rising oil prices.
Looking ahead to April's price situation, Cao Zhihong analyzed that the high base effect for fruit prices will continue for about two months, suppressing the CPI increase. The April CPI increase is expected to expand significantly, but will remain below 2%. As for the core CPI, excluding fruits, vegetables, and energy, it was already at 1.94% in March, close to 2%. It is anticipated that the deferred effect of rising oil prices and indirect impacts will be reflected in April, pushing the core CPI to around 2%.
Furthermore, the import price index in US dollars rose by 8.53% year-on-year in March, the largest increase in 44 months. Cao Zhihong stated that the impact of rising import prices will gradually be transmitted to domestic production costs, with a time lag of about one to two quarters, and the impact needs to be continuously monitored.
When media inquired whether rising international energy prices would bring imported inflation pressure, Cao Zhihong replied that although international energy prices have soared, agricultural and industrial raw material prices have seen mixed trends. Coupled with the government's strong stabilization mechanism, "there will be an impact, but the government is trying its best to control it, and there is currently no phenomenon of imported inflation." (Editor: Yang Kai-hsiang) (Published April 8, 2015)
International oil prices soared, with the average price of OPEC crude oil reaching $116.36 per barrel in March, a 57.2% annual increase. However, domestic prices remained stable, with oil fees even decreasing by 0.33% year-on-year.
Cao Zhihong, Director of Statistics at the DGBAS, explained that the March CPI increase was not significantly impacted by the Middle East conflict due to two main factors: first, the government's corresponding price stabilization measures against rising energy prices caused by the conflict; second, stable recent weather conditions led to increased fruit supply, and compared to the high fruit prices of the first half of last year, the high base effect caused fruit prices to drop by 23.32%, which alone impacted the overall CPI by 0.61 percentage points.
Cao Zhihong added that if we observe the price of CPC's 95 unleaded gasoline, the average price in March last year was NT$30.77, while in March this year it was NT$30.64. This means that after the government's special stabilization mechanism and expanded tax reduction in response to the US-Iran conflict, the oil fee price in March this year was lower than the same period last year, resulting in a negative impact on the CPI.
Cao Zhihong further explained that although OPEC oil prices increased by over 70% month-on-month in March, under the government's stabilization mechanism, the CPI oil fee only rose by 6.49% compared to February, meaning the domestic oil fee increase was only 9% of the international oil price increase, significantly smaller than the international oil price rise and even lower than the same period last year.
Despite stable prices in March, Cao Zhihong pointed out that after the government absorbed part of the increase, CPC's 95 unleaded gasoline price at the end of March was NT$33.9. Even if oil prices are frozen in April and remain at NT$33.9, this will still represent a 10% increase compared to the average price in March, impacting the CPI by 0.22 percentage points.
Cao Zhihong frankly stated, "Don't think March was so low; the increases are reflected in April." Besides the deferred oil price increases, international fuel surcharges and international airfares significantly increased in April, which will have a major impact.
Cao Zhihong also noted that dining-out expenses, closely related to people's livelihoods, also saw a significant month-on-month increase in March, and it needs to be monitored whether this is a short-term phenomenon or a spillover effect from rising oil prices.
Looking ahead to April's price situation, Cao Zhihong analyzed that the high base effect for fruit prices will continue for about two months, suppressing the CPI increase. The April CPI increase is expected to expand significantly, but will remain below 2%. As for the core CPI, excluding fruits, vegetables, and energy, it was already at 1.94% in March, close to 2%. It is anticipated that the deferred effect of rising oil prices and indirect impacts will be reflected in April, pushing the core CPI to around 2%.
Furthermore, the import price index in US dollars rose by 8.53% year-on-year in March, the largest increase in 44 months. Cao Zhihong stated that the impact of rising import prices will gradually be transmitted to domestic production costs, with a time lag of about one to two quarters, and the impact needs to be continuously monitored.
When media inquired whether rising international energy prices would bring imported inflation pressure, Cao Zhihong replied that although international energy prices have soared, agricultural and industrial raw material prices have seen mixed trends. Coupled with the government's strong stabilization mechanism, "there will be an impact, but the government is trying its best to control it, and there is currently no phenomenon of imported inflation." (Editor: Yang Kai-hsiang) (Published April 8, 2015)