Taiwan records deflation for 1st time in 3 years

Taiwan records deflation for 1st time in 3 years
The China Post/Asia News Network

TAIPEI - Taiwan recorded a deflation for the first time in three years, as government statistics pointed to a minus-0.79-per cent consumer price index (CPI) growth in August.

The CPI stood at 102.7 in August, according to a report released by the Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday.

While the August CPI rose 0.12 per cent from July, it dropped 0.79 per cent compared with a year ago, which marks the first year-on-year drop since August 2010.

Between January and August, the CPI grew a mere 0.87 per cent, which is much lower than the 2 per cent cap set by the central bank of Taiwan, indicating consumer prices have stayed fairly stable so far this year.

Factors Contributing to Deflation

Although Tropical Storms Trami and Kong-Rey engulfed Taiwan in August, they did not bring much damage to the island in terms of driving prices up, for they were in Taiwan only for a relatively short period of time, the DGBAS said.

Two storms visited Taiwan in August last year, driving prices up. With a higher base period in 2012, fruit and vegetable prices in August declined from a year ago.

Another reason causing the CPI to drop year-on-year is that many 3C products (computer, communication and consumer electronics) were on sales in August, driving prices down.

The August CPI grew 0.12 per cent month-on-month, because unstable weather had affected agricultural production, driving fruit and vegetable prices up. In addition, the Ghost Festival which involved preparing ritualistic food offerings also contributed to price increases.

However, seasonal clothing sales, price drops in air travel and travel packages partially offset price increases.

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