Thursday November 5, 08:46 AM
INSTANT VIEW 1-Taiwan Oct CPI down 1.84 pct y/y
TAIPEI, Nov 5 (Reuters) - Taiwan's consumer price index (CPI (NYSE: CPY - news) )
in October fell by an annual 1.84 percent, the government said
on Thursday, steeper than market forecasts, showing weaker than
expected domestic demand.
Taiwan's CPI has been posting annual falls for most of this
year, although analysts said the central bank would not be too
concerned with the declines as prices had begun to trend higher
on a monthly basis.
With inflation not a major concern so far and the economy
still weak, the central bank is expected to keep its main policy
rate on hold at a record low of 1.25 percent at its next
scheduled meeting in December.
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KEY POINTS:
OCTOBER POLL SEPTEMBER
CPI (y/y pct chg) -1.84 -1.47 -0.88*
*: revised
(Click on for consumer price index table)
COMMENTARY
REHONG CHUANG, ASSISTANT MANAGER OF RESEARCH, SINOPAC
HOLDINGS
'A downward CPI was predicted. What it first off means is
that it looks like domestic demand is still quite weak. That is,
the unemployment rate is still high so people don't want to spend
money. As for next month, it should come back to plus 5.96. It
looks pretty good. Because CPI is down, there's no inflation and
that's stable, there's no pressure to raise interest rates.'
MA TIEYING, ECONOMIST, DBS IN SINGAPORE
'It's clear that there's no inflationary pressure here
looking at the figures. The earliest we may see some positive CPI
figures may be in December, and 2010 will also be positive, but
the climb will be very gradual.'
'Asset price inflation is the biggest worry right now. We may
see some tightening of monetary policy, but not at the current
moment. It still all depends on GDP, export and unemployment
figures returning to pre-crisis levels.'
MARKET REACTION:
-- The data came as the Taiwan dollar ended stronger
at T$32.536 to the U.S. dollar.
-- Taiwan's stock market ended down 0.66 percent.
LINKS:
-- For more data, see the Directorate General of Budget,
Accounting and Statistics' website at www.dgbas.gov.tw
-- For all Taiwan news and data, 3000 Xtra users can click on ,
BACKGROUND:
-- The government said in August it expected Taiwan's economy
to shrink 4.04 percent in 2009, which would be the worst
performance since 1962 when records began, but will expand 3.92
percent in 2010.
-- The government estimated Taiwan's consumer price
index would likely fall 0.68 percent in 2009 and post a 0.87
percent rise next year.
-- In September, the central bank kept its benchmark discount
rate unchanged at a record low of 1.25 percent, its third straight
pause after seven straight cuts.
-- The statistics agency will release the next set of data on
Dec 7.
(Reporting by Taipei Newsroom; editing by Ken Wills)
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