Taiwan headline inflation likely to creep higher into next year

Taiwan's November inflation rose 0.53% yoy, which was higher than expected by consensus. Shift of oil base, which reduced the drag on headline inflation should be a reason for this.

Headline inflation actually dropped 0.11% mom sa,, on a sequential basis, due to recession of both retail pump prices and food inflation.

The core inflation strengthening continued, despite of recent concerns on consumer sentiment that it might deteriorate in middle of weak labor market conditions in manufacturing.

It accelerated to 0.86% yoy in the month of November, led by strengthening services, and upward price adjustments to major tobacco brands.

"All said, we continue to believe headline inflation is likely to creep higher into next year on lower base effects and maintain our 2016 inflation forecast of 1.7% y/y.Food prices remained elevated, despite falling slightly on abundant supplies", says Barclays in a research note.