Taiwan's CPI likely down post the typhoon season

Taiwan's fresh food price strength may have been extended, since the last strong typhoon, Dujuan, occurred at the end of September. Hence, the fresh food prices are likely to have declined only slightly in October. 

Taiwan's fresh food prices climbed strongly in September, recording double-digit growth for the second consecutive month and raising headline CPI out of the negative zone earlier than expected. 

"This is mainly due to the three tropical cyclones that hit the country in August and September, compared with only one soft cyclone over the same period last year. The  fresh food prices ae expected to have normalized downwards in October", says Societe Generale. 

The administrated fuel prices have been raised marginally, which is likely to have offset some of the softening in fresh food prices. More importantly, underlying inflation pressures have continued to soften, against the backdrop of weakening growth momentum. 

Taiwan's services CPI reading came in at its weakest level in 19 months in September. Given weakening wage growth and cooling consumer confidence, we expect further softening in the core CPI inflation.