CPI growth hit 3-month high of 1.23% in April

This article was published by the Taiwan Headlines on May 11, 2006. It reports that the annual rise of Taiwan's consumer price index (CPI) hit a three-month high of 1.23 percent in April 2006. In the same month, the annual rise of the wholesale price index (WPI) stood at 3.04 percent, the highest increase since February 2005.

Officials at the government's Directorate General of Budget, Accounting and Statistics attributed the rise to price hikes for international oil and agricultural and industrial raw materials. At the end of April 2006, the price of crude oil set by the Organization of Petroleum Exporting Countries (OPEC) amounted to US$64.4 per barrel, an increase of 29.8 percent from the corresponding figure in 2005. The soaring price of oil increased costs for many industries in Taiwan.

According to market observers, the price of electricity in Taiwan is very likely to be raised by 6 percent in June 2006, which may push up the annual rise of the CPI by an additional 0.03 to 0.05 percent. If the price of electricity is hiked by 10 percent, then the additional rise will be 0.09 percent.

Compared to March, the average price of vegetables posted a sharp rise of 25.43 percent in April 2006, that of clothes rose by 22.3 percent, and that of fuel oil rose by 2.23 percent. In sharp contrast, the prices of telecommunications and related services fell by 4 percent. The prices of consumer electronic products and communication facilities have also declined by 30 percent to 50 percent since 2001.

According to officials at the government's Directorate General of Budget, Accounting and Statistics, in spite of soaring oil prices, the annual rise of Taiwan's CPI would be well controlled at below 2 percent for the whole 2006. nation's ranking for the item of "whether bank financing can support business activities" also dropped to the 31st place in 2006, from the 17th place in 2005. Finally, Taiwan's rankings for the item of "risk for political instability" and "social cohesiveness" both plunged to the 58th place in 2006.