Taipei: Taiwan's central bank has raised its 2026 growth forecast for the consumer price index (CPI) to 1.93 percent, citing higher than expected inflation in the second quarter.

According to Focus Taiwan, in the second quarter, the domestic CPI rose by 2.17 percent, while the core CPI, which excludes fruits, vegetables, and energy, grew 2.15 percent. This information was part of a written report submitted by the central bank to the Legislature ahead of a committee hearing. The bank noted that these increases were slightly higher than its earlier forecast of 2.1 percent and 2.06 percent, respectively.

In its report, the central bank adjusted its CPI forecast for the entire year from 1.91 percent to 1.93 percent and raised its projection for the core CPI from 1.90 percent to 1.92 percent. Taiwan's CPI increased by 2.60 percent year-on-year in June, marking the second consecutive month of increase after a 2.20 percent hike in May. This rise was attributed to a spike in fuel prices amid tensions in the Middle East and soaring vegetable prices resulting from adverse weather conditions in Taiwan.

The central bank highlighted that the government has implemented price stabilization measures to ease inflationary pressure, resulting in a mild CPI growth of 1.7 percent in the first half of the year, which is below the 2 percent alert threshold it had set. The bank also indicated that with crude oil prices showing signs of easing, domestic fuel prices, transportation services costs, and tourism expenses may fall later this year.

The central bank forecasted that domestic inflation will remain under control in the third and fourth quarters of the year and noted that imported inflation also appears to be under control. According to the Directorate General of Budget, Accounting and Statistics (DGBAS), local CPI growth could still exceed 2 percent in July due to more expensive vegetables and fruit caused by disruptive weather from Typhoon Bavi, though the increase may be slightly smaller than in June. In late May, the DGBAS projected Taiwan's CPI to grow 1.93 percent in 2026, an increase of 0.25 percentage points from its earlier estimate made in February.