Taiwan’s CPI inflation likely turned negative in September on negative base effect

Taiwan’s consumer price index inflation is expected to have turned negative momentarily due to a negative base effect. In August CPI inflation slowed to 0.6 percent year-on-year from July’s 1.2 percent year-on-year due to normalizing food price inflation. Food prices are likely to have registered a slight sequential rise in September. But a strong negative impact is expected to have driven the year-on-year rate to negative territory for the first time since September 2013, according to Societe Generale.

In the meantime, there was a modest increase in fuel prices in September and not much imported inflation. The headline inflation rate is expected to have fallen sharply to -0.1 percent year-on-year in September from 0.6 percent year-on-year in August, stated Societe Generale. However, this is expected to be for a temporary period of time and the headline rate is expected to rebound throughout the remainder of the year.

“Given contained appreciation in the currency and muted real wage growth, core CPI inflation is likely to have remained stable in September”, added Societe Generale.