Taipei: Taiwan’s consumer price index (CPI) in May rose 1.55 percent from the previous year, marking the lowest increase in four years and two months, primarily due to declining food and oil prices, as reported by the Directorate General of Budget, Accounting and Statistics (DGBAS) on Thursday. The CPI also decreased by 0.27 percent from April and fell 0.14 percent after seasonal adjustments, according to data compiled by the DGBAS.

According to Focus Taiwan, the year-on-year CPI growth in May moderated compared to a 2.03-percent growth in April, as explained by DGBAS specialist Tsao Chih-hung during a news briefing. More stable weather conditions recently have led to a moderate hike in fruit prices and a shift in vegetable prices from rising to falling, reducing the overall increase in food prices. Additionally, the continued decline in international crude oil prices has contributed to a slowdown in the CPI growth rate, Tsao stated.

Tsao further observed that while the increase in rents and medical expenses moderated, dining-out costs remained relatively high in May. The core CPI, excluding fruit, vegetables, and energy, stood at 1.61 percent, remaining below the 2 percent alert level set by the central bank for 14 consecutive months, indicating relatively stable overall price trends, according to Tsao.

However, Tsao noted that despite the moderation in CPI growth in May, the year-on-year growth rate of dining-out expenses reached 3.5 percent, continuing to expand and marking a 15-month high. He mentioned that since electricity prices were not increased in April this year, it is expected that the growth of dining-out expenses will not expand significantly and should gradually slow down, though it will take some time for dining-out inflation to fall below 3 percent.

Looking forward, Tsao projected that the year-on-year CPI growth rate in June might be slightly lower than in May, mainly due to the higher base effect caused by last year’s Dragon Boat Festival falling in June. He also mentioned that inflation in the second half of this year may remain below 2 percent, with typhoon-related factors already considered. This projection is attributed mainly to stable international oil prices and favorable exchange rate factors, which have reduced import costs for businesses.

Meanwhile, the producer price index (PPI) in May fell 4.3 percent from a year earlier, while the import price index dropped 9.05 percent in Taiwan dollar terms, with both reaching their lowest levels in nearly two years, according to the DGBAS. Tsao explained that this was primarily due to the 7.09 percent year-on-year appreciation of the Taiwan dollar against the U.S. dollar, which has helped ease import costs for businesses. This cost relief is expected to be gradually reflected in domestic prices in the next one to two quarters, potentially alleviating pressures for businesses to raise prices, he added.