Taiwan’s headline CPI inflation likely to have remained stable in June

Taiwan’s headline CPI inflation is expected to have remained stable in June. In the previous month, the CPI inflation had slowed to 1.2 percent year-on-year from 1.9 percent year-on-year. This was predominantly because of deceleration in food price inflation.

Since prices of food have almost returned to the levels before the winter supply shock, further correction in not expected to take place. CPI food price inflation is expected to have accelerated slightly by 0.2 percent month-on-month in June, noted Societe Generale in a research report. This is likely to be due to meat prices that appear to have been under upward pressure since summer.

However, on a year-on-year basis, food inflation is expected to have declined to 5 percent in June from May’s 5.8 percent. It is expected to have pulled down the headline figure slightly. In the mean time, fuel prices on average were more in June than in May. This is likely to counter the negative base impacts from food inflation, added Societe Generale.  The overall rate of inflation is expected to have remained stable with absence of inflation in other components.