Taiwan 2015 inflation likely to be -0.1%

Taiwan August inflation came in at -0.45%, stronger than expected, as a powerful typhoon pushed up food prices. Food prices were up 3.1% y/y, led by soaring vegetable and fruit prices. The jump in food prices also offset the oil drag, which intensified in August as retail pump prices were cut by 4.3% m/m. 

Core inflation remained generally steady at 0.61% y/y in August, edging lower on retail discounts on clothing and household appliances. All told, no deflationary risk is seen, as core inflation continues to be supported by solid domestic demand, as evidenced by the relative resilience in services inflation, which stood at 0.8% in August. 

"As such, 2015 inflation is still forecasted at -0.1% and inflation is expected to rebound to 2.1% in 2016, on account of a low base and subsequent pickup in oil prices", says Barclays.