Will War Reignite Inflation Crisis? DGBAS Deconstructs Price Impact
The Directorate-General of Budget, Accounting and Statistics (DGBAS) analyzed the potential for the US-Iran conflict to reignite an inflation crisis. Unlike the 2022 Russia-Ukraine war, the current impact on prices is primarily concentrated on energy, with the government attempting to curb inflation through supply-side measures. However, experts warn that government intervention could distort the market and lead to long-term issues.
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- 📰 Published: April 18, 2026 at 11:24
- 🔍 Collected: April 18, 2026 at 11:31 (7 min after Published)
- 🤖 AI Analyzed: April 18, 2026 at 22:07 (10h 35m after Collected)
US-Iran War Key News
Central News Agency
(Central News Agency reporter Pan Ziyu, Taipei, 18th) After the outbreak of the Russia-Ukraine war in 2022, Taiwan's CPI exceeded the 2% inflation alert line for three consecutive years, finally falling back last year. However, with the US-Iran conflict this year, international energy prices have surged, raising concerns about imported inflation making a comeback. The Directorate-General of Budget, Accounting and Statistics (DGBAS) analyzed the differences between the Russia-Ukraine war and the current conflict, believing that the current impact on prices is focused on energy, which is why the government is addressing it from the supply side.
Looking back at price changes in recent years, the global COVID-19 pandemic broke out in 2020. Due to weak consumption and a sharp drop in international oil prices, the CPI fell into negative growth that year. However, with the recovery of demand after the pandemic, as well as supply chain disruptions, port congestion, and other issues pushing up prices, the annual CPI increase reached 1.97% in 2021.
In February 2022, the Russia-Ukraine war broke out, and international agricultural and industrial raw material prices surged, leading to global inflationary pressure. Taiwan's CPI also soared to 2.95% that year, and the inflation rate remained above 2% for three consecutive years, only falling back to 1.66% in 2025.
However, at the end of February this year, US and Israeli forces launched airstrikes on Iran, followed by Iranian retaliation, causing Middle East tensions to escalate. Coupled with Iran's de facto blockade of the Strait of Hormuz, international oil prices surged, and natural gas transportation was disrupted, directly impacting energy-dependent Asian countries.
Ma Tieying, Senior Economist at DBS Group, pointed out that even if the Middle East conflict does not escalate further, it would still take several months for shipping confidence and insurance coverage to return to normal after the Strait of Hormuz reopens, as they typically lag behind political agreements. In addition, some Persian Gulf refineries were affected by airstrikes, and it will take time to repair energy infrastructure.
In other words, even if the US-Iran war ends in April, the economic impact caused by unstable energy supply and rising prices will continue.
International organizations have issued warnings. The International Monetary Fund (IMF) believes that the Middle East conflict could lead to high inflation and low growth in the global economy. The World Bank further pointed out that persistently high international oil prices will cause East Asian countries to face the dual pressure of rising inflation and slowing economic growth.
Taiwan has just emerged from the shadow of three consecutive years of CPI annual growth rate exceeding 2% since the Russia-Ukraine war, and now, due to the outbreak of the US-Iran war this year, inflation is looming.
However, Cao Zhihong, a specialist at the DGBAS's Comprehensive Census Department, pointed out that there are still significant differences in the impact of the Russia-Ukraine war and the US-Iran war on domestic prices. After the outbreak of the COVID-19 pandemic, supply chain disruptions, port congestion, and container shortages gradually emerged in 2021. Coupled with the surge in demand after the pandemic, multiple factors had already pushed the CPI close to 2%, and the Russia-Ukraine war in 2022 was 'another push.'
Cao Zhihong then stated that Ukraine is the granary of Europe, which significantly impacts bulk raw materials such as yellow corn, wheat, and soybeans, and also affects domestic livelihoods.
Looking at international commodity prices, the prices of yellow corn, wheat, and soybeans were all at recent highs in 2022. The average price of corn in 2022 was US$6.93 per bushel, while in March this year it was US$4.52. The price of soybeans in 2022 was US$15.49 per bushel, while in March this year it was US$11.71. The average price of wheat in 2022 was US$9.02 per bushel, while in March this year it was only US$5.95. The current prices of yellow corn, wheat, and soybeans do not differ significantly from the prices before the outbreak of the US-Iran conflict.
Cao Zhihong explained that the Russia-Ukraine war caused a surge in bulk raw material prices. Corn is an important feed ingredient for livestock, soybeans can be used for oil extraction, and wheat affects food, bread, and flour, having a more comprehensive impact on the CPI and significantly affecting the CPI of important domestic necessities.
In contrast, Cao Zhihong believes that the impact of this year's US-Iran war on prices is 'currently focused on energy.' Therefore, the government is trying to control energy prices through supply-side measures to mitigate the impact on overall prices.
After the outbreak of the Middle East conflict, to prevent imported inflation from rapidly escalating, the government adopted supply-side measures, including implementing the 'lowest price in neighboring countries' adjustment cap and the 'oil price stabilization mechanism' for a dual slow-increase mechanism for oil prices; coupled with a special slow-increase mechanism, absorbing at least 60% of the increase in gasoline and diesel prices; extending tax reductions on key raw materials and expanding the reduction in gasoline and diesel commodity taxes by 50%; reducing commodity tax on bottled gas by 50% from April; maintaining unchanged prices for domestic natural gas and bottled gas for civilian use in April; and freezing domestic electricity prices from April to September, as well as public transportation fares.
Central Bank Governor Yang Chin-long has repeatedly explained that the recent Middle East war and the 2022 Russia-Ukraine war are both 'supply-side shocks,' and therefore should be addressed with supply-side measures. The Central Bank also recently stated that it will stabilize the exchange rate to mitigate the impact of rising international raw material prices on domestic prices.
Although the latest data shows that various government measures have indeed been effective in curbing inflation, with the CPI annual increase in March being only 1.2%, which was unexpectedly mild, DGBAS admitted that the increase in April will definitely expand, with the CPI possibly not reaching 2%, and the core CPI estimated to be around 2%.
Wu Daren, a professor in the Department of Economics at National Central University, believes that import prices and oil prices are both rising, and imported inflation 'is happening.'
Wu Daren reminded that government slow-increase and freeze policies cannot solve inflationary pressure, but only delay the reaction of inflation. Taking the experience of the Russia-Ukraine war in previous years as an example, even though the government suppressed electricity prices to curb inflation expectations, inflation continued for a long time, which also caused Taipower to suffer losses for consecutive years, which is detrimental to subsequent investments in grid resilience and other areas, and may affect power generation safety and stability in the future.
Wu Daren stated that inflation is indeed an important issue, but the government's approach of having Taipower and CPC Corporation bear losses to mitigate inflation not only excessively interferes with the market but also creates other sequelae. He suggested learning from neighboring countries, such as South Korea, which allocated 'high oil price victim support funds,' allowing energy prices to react according to market mechanisms, and then the government allocated a budget to subsidize the public for the increased prices, which can also achieve the effect of reducing the burden. (Edited by Pan Yijing) 1150418
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Central News Agency
(Central News Agency reporter Pan Ziyu, Taipei, 18th) After the outbreak of the Russia-Ukraine war in 2022, Taiwan's CPI exceeded the 2% inflation alert line for three consecutive years, finally falling back last year. However, with the US-Iran conflict this year, international energy prices have surged, raising concerns about imported inflation making a comeback. The Directorate-General of Budget, Accounting and Statistics (DGBAS) analyzed the differences between the Russia-Ukraine war and the current conflict, believing that the current impact on prices is focused on energy, which is why the government is addressing it from the supply side.
Looking back at price changes in recent years, the global COVID-19 pandemic broke out in 2020. Due to weak consumption and a sharp drop in international oil prices, the CPI fell into negative growth that year. However, with the recovery of demand after the pandemic, as well as supply chain disruptions, port congestion, and other issues pushing up prices, the annual CPI increase reached 1.97% in 2021.
In February 2022, the Russia-Ukraine war broke out, and international agricultural and industrial raw material prices surged, leading to global inflationary pressure. Taiwan's CPI also soared to 2.95% that year, and the inflation rate remained above 2% for three consecutive years, only falling back to 1.66% in 2025.
However, at the end of February this year, US and Israeli forces launched airstrikes on Iran, followed by Iranian retaliation, causing Middle East tensions to escalate. Coupled with Iran's de facto blockade of the Strait of Hormuz, international oil prices surged, and natural gas transportation was disrupted, directly impacting energy-dependent Asian countries.
Ma Tieying, Senior Economist at DBS Group, pointed out that even if the Middle East conflict does not escalate further, it would still take several months for shipping confidence and insurance coverage to return to normal after the Strait of Hormuz reopens, as they typically lag behind political agreements. In addition, some Persian Gulf refineries were affected by airstrikes, and it will take time to repair energy infrastructure.
In other words, even if the US-Iran war ends in April, the economic impact caused by unstable energy supply and rising prices will continue.
International organizations have issued warnings. The International Monetary Fund (IMF) believes that the Middle East conflict could lead to high inflation and low growth in the global economy. The World Bank further pointed out that persistently high international oil prices will cause East Asian countries to face the dual pressure of rising inflation and slowing economic growth.
Taiwan has just emerged from the shadow of three consecutive years of CPI annual growth rate exceeding 2% since the Russia-Ukraine war, and now, due to the outbreak of the US-Iran war this year, inflation is looming.
However, Cao Zhihong, a specialist at the DGBAS's Comprehensive Census Department, pointed out that there are still significant differences in the impact of the Russia-Ukraine war and the US-Iran war on domestic prices. After the outbreak of the COVID-19 pandemic, supply chain disruptions, port congestion, and container shortages gradually emerged in 2021. Coupled with the surge in demand after the pandemic, multiple factors had already pushed the CPI close to 2%, and the Russia-Ukraine war in 2022 was 'another push.'
Cao Zhihong then stated that Ukraine is the granary of Europe, which significantly impacts bulk raw materials such as yellow corn, wheat, and soybeans, and also affects domestic livelihoods.
Looking at international commodity prices, the prices of yellow corn, wheat, and soybeans were all at recent highs in 2022. The average price of corn in 2022 was US$6.93 per bushel, while in March this year it was US$4.52. The price of soybeans in 2022 was US$15.49 per bushel, while in March this year it was US$11.71. The average price of wheat in 2022 was US$9.02 per bushel, while in March this year it was only US$5.95. The current prices of yellow corn, wheat, and soybeans do not differ significantly from the prices before the outbreak of the US-Iran conflict.
Cao Zhihong explained that the Russia-Ukraine war caused a surge in bulk raw material prices. Corn is an important feed ingredient for livestock, soybeans can be used for oil extraction, and wheat affects food, bread, and flour, having a more comprehensive impact on the CPI and significantly affecting the CPI of important domestic necessities.
In contrast, Cao Zhihong believes that the impact of this year's US-Iran war on prices is 'currently focused on energy.' Therefore, the government is trying to control energy prices through supply-side measures to mitigate the impact on overall prices.
After the outbreak of the Middle East conflict, to prevent imported inflation from rapidly escalating, the government adopted supply-side measures, including implementing the 'lowest price in neighboring countries' adjustment cap and the 'oil price stabilization mechanism' for a dual slow-increase mechanism for oil prices; coupled with a special slow-increase mechanism, absorbing at least 60% of the increase in gasoline and diesel prices; extending tax reductions on key raw materials and expanding the reduction in gasoline and diesel commodity taxes by 50%; reducing commodity tax on bottled gas by 50% from April; maintaining unchanged prices for domestic natural gas and bottled gas for civilian use in April; and freezing domestic electricity prices from April to September, as well as public transportation fares.
Central Bank Governor Yang Chin-long has repeatedly explained that the recent Middle East war and the 2022 Russia-Ukraine war are both 'supply-side shocks,' and therefore should be addressed with supply-side measures. The Central Bank also recently stated that it will stabilize the exchange rate to mitigate the impact of rising international raw material prices on domestic prices.
Although the latest data shows that various government measures have indeed been effective in curbing inflation, with the CPI annual increase in March being only 1.2%, which was unexpectedly mild, DGBAS admitted that the increase in April will definitely expand, with the CPI possibly not reaching 2%, and the core CPI estimated to be around 2%.
Wu Daren, a professor in the Department of Economics at National Central University, believes that import prices and oil prices are both rising, and imported inflation 'is happening.'
Wu Daren reminded that government slow-increase and freeze policies cannot solve inflationary pressure, but only delay the reaction of inflation. Taking the experience of the Russia-Ukraine war in previous years as an example, even though the government suppressed electricity prices to curb inflation expectations, inflation continued for a long time, which also caused Taipower to suffer losses for consecutive years, which is detrimental to subsequent investments in grid resilience and other areas, and may affect power generation safety and stability in the future.
Wu Daren stated that inflation is indeed an important issue, but the government's approach of having Taipower and CPC Corporation bear losses to mitigate inflation not only excessively interferes with the market but also creates other sequelae. He suggested learning from neighboring countries, such as South Korea, which allocated 'high oil price victim support funds,' allowing energy prices to react according to market mechanisms, and then the government allocated a budget to subsidize the public for the increased prices, which can also achieve the effect of reducing the burden. (Edited by Pan Yijing) 1150418
Choose to stand with facts, every sponsorship you provide is a force to protect press freedom.
Download the Central News Agency 'First-hand News' APP to grasp the latest news in real-time.
The text, images, and videos on this website may not be reproduced, publicly broadcast, publicly transmitted, or utilized without authorization.