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Commercial Times: What the July CPI tells us
Central News Agency
2014-08-09 05:03 PM
In July, Taiwan's consumer price index (CPI) rose by an annual 1.75 percent, the biggest growth in 17 months, with dining-out costs jumping 4.24 percent, the highest increase rate in five and a half years. The news has drawn widespread public attention since it was reported, but the question must be asked whether prices in Taiwan are really very high. In fact, the 1.75 percent increase should be considered small compared with the figures over the past four decades and the data from neighboring countries. Between 1989 and 1996, Taiwan's CPI rose over 3 percent every year except in 1993, averaging a 3.8 percent increase. In the five years prior to the 2008 global financial crisis, the average increase was approximately 2 percent. Taiwan's CPI growth in the first seven months of this year was 1.29 percent, lower than South Korea's 1.4 percent, Singapore's 1.7 percent, Hong Kong's 3.9 percent, China's 2.3 percent and Japan's 2.5 percent. Over the past three years, Taiwan's inflation rate has averaged only 1.4 percent, also lower than South Korea's 2.5 percent, Singapore's 4.1 percent and Hong Kong's 4.6 percent. The mild increase in Taiwan, however, has spurred public complaints mainly because the country's wage levels have stagnated over the past 10 years, while interest rates on savings have remained low. In the past, people complained very little about inflation rates of up to 3 percent because at that time, salaries were increasing at a pace of 5-6 percent per year, while the fixed deposit interest rate was 6-7 percent. The public's complaints in recent months about rising prices are also linked to the increasing financial pressure on low-income families. In July, the CPI for low-income families rose 2.05 percent, higher than the 1.82 percent for middle-class families and 1.6 percent for high-income families. The government needs to take steps to address the widening income gap to prevent social unrest. (Editorial abstract -- Aug. 9, 2014) (By Y.F. Low)
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