Taiwan’s consumer price index inflation likely eased in August

Taiwan’s consumer price index inflation is expected to have eased in August due to peaceful summer weather. The summer hike in fresh food prices is not expected to have taken place as seen in past years. A moderate month-on-month rise in overall food prices is likely; however, with the negative base effects, the year-on-year rate would possibly ease to lower than 3 percent from 5.5 percent in July and negatively contribute 0.7 percentage points from the headline CPI, said Societe Generale in a research note.

In the meantime, fuel prices rose slowly in August. Given the support from positive base effects, fuel prices would probably drive transportation CPI to improve more and contribute 0.1 percentage points to the headline figure.

In all, with an absence of shocks in other categories, inflationary pressure is expected to remain weak. The Taiwanese central bank still has room for additional monetary policy easing, according to Societe Generale.