Despite electricity rate hike, April CPI growth falls below 2% alert

Taipei, May 7 (CNA) Despite an increase of 11 percent on average in electricity bills from April 1, local consumer price index (CPI) growth for the month fell below the 2 percent alert set by the central bank, the Directorate General of Budget, Accounting and Statistics (DGBAS) said Tuesday.

The DGBAS said the moderating CPI growth came after an almost 20 percent year-on-year fall in egg prices in April.

Data compiled by the DGBAS showed the CPI rose 1.95 percent from a year earlier in April after a 2.15 percent increase in March, while eliminating seasonal factors resulting from the Lunar New Year holiday the April figure fell to its lowest since July 2023, when the index stood at 1.88 percent.

On a month-on-month basis, the CPI grew 0.56 percent and after seasonal adjustments, the index also rose 0.10 percent, the data indicated.

Core CPI, which excludes vegetables, fruit and energy, rose 1.81 percent from a year earlier in April, also slowing from growth of 2.14 percent in March, the DGBAS said.

In the first four months of this year, the local CPI grew 2.24 percent from a year earlier with core CPI rising 2.12 percent year-on-year, according to the DGBAS.

Due to a relatively high comparison base over the same period of last year, when Taiwan suffered an egg shortage, egg prices for April tumbled 19.03 percent, which capped CPI growth by 0.09 percentage points for the month, the DGBAS said.

In April, food prices rose 2.58 percent from a year earlier with the price of fruit, vegetables, cooking oil, frozen food, and grains up 4.28 percent, 2.19 percent, 3.98 percent, 3.50 percent and 3.00 percent, respectively. Dining out costs also grew 2.93 percent in April.

However, food price growth was offset by a tumble in egg prices, the DGBAS said.

Living costs, including rent and electricity bills, also rose 2.07 percent from a year earlier, while rent rose 2.34 percent, marking the largest growth in 15 months.

Speaking with reporters, DGBAS specialist Tsao Chih-hung (曹志弘) said the hike in electricity tariffs boosted household power bills by 4.48 percent from a year earlier in April and pushed up the CPI by 0.05 percentage points in the month.

Tsao said the DGBAS will watch closely whether food vendors raise product prices after the electricity rate hike, which could push up dining out costs for consumers down the road.

According to Tsao, the growth in dining out expenses in April was the slowest in about 30 months, which also helped to stabilize overall CPI growth.

In addition to higher electricity bills, Tsao said higher rent and more expensive medical expenses also drove up the April CPI.

In April medical expenses rose 3.52 percent from a year earlier on the back of higher registration fees required by some clinics as well as an increase in payments by patients under the national health insurance scheme, the DGBAS said.

The cost of a basket of 17 government-monitored household necessities, including rice, pork, bread, eggs, sugar, cooking oil, instant noodles, shampoo and toilet paper, fell 0.16 percent from a year earlier in April after a 4.70 percent increase in March, the DGBAS said.

The 0.16 percent fall marked the first decline since April 2020, when the cost of the 17 household necessities dropped 0.01 percent from a year earlier, the DGBAS added.

Tsao said the drop in the 17 items largely reflected a plunge in egg prices from April 2023.

Looking ahead, Tsao said the CPI could rise more than 2 percent in May, citing higher vegetable prices after bad weather in late April affected output.

Tsao said growth in dining out costs and rent is expected to stay sticky and add upward pressure to CPI growth in May, while the drop in egg prices showed signs of moderating this month.

In April, the producer price index (PPI) rose 2.06 percent from a year earlier largely due to an increase in the price of international crude oil, coal products, chemical materials and drugs, as well as higher electricity rates, the DGBAS said.

In the first four months, the PPI rose 0.49 percent from a year earlier, the DGBAS added.

After taking into account the electricity rate hike, the central bank announced at a quarterly policymaking meeting in March that it has raised its forecast for CPI growth to 2.16 percent from the previous estimate of 1.89 percent.

In late March, the DGBAS said higher power bills could boost CPI growth by 0.18 percentage points.

The DGBAS forecast in late February that the CPI growth for 2024 would hit 1.85 percent before assessing the impact from electricity rate hikes. The agency is scheduled to release an official forecast update later this month.