Sharp increase in food prices to have driven Taiwan’s headline inflation again in October

Taiwan’s consumer price inflation is expected to have accelerated in October, driven by the sharp increases in prices of fresh food. Agricultural production in the nation has not been damaged by a few violent typhoons in October. But prices of fruit and vegetable rose sharply in October and is reported that prices failed to normalize down even after two weeks of bad weather, noted Societe Generale in a research note.

Thus  the CPI food inflation is likely to have increased sharply again, pushing up the headline CPI inflation by about 0.7 percentage points, added Societe Generale. Major changes are not expected in other categories, despite the marginal rise in fuel prices.

Meanwhile, core inflation is expected to have accelerated to 1 percent on an annual basis in October from September’s 0.8 percent year-on-year. This appears to have been boosted by a one-off rise in computer prices, rather than increasing underlying inflationary pressure. Services inflation in Taiwan continued to stay at 0.8 percent on an annual basis for the tenth consecutive month in September. Thus core inflation is likely to stay contained and linger at a level marginally below 1 percent in the near term, according to Societe Generale.