TAIPEI (Taiwan News) — Board members of Taiwan's Central Bank believe the continued COVID-19 pandemic and a shortage of container space could fuel inflation, reports said Friday (July 30).

A key element playing a role in inflation fears is the trade war between China and the United States, which caused the removal of supply chains from China, driving up prices for the production of consumer goods and congestion at ports, UDN reported.

In June, the Central Bank predicted the Consumer Price Index (CPI) would grow by 1.6% in 2021. This is within the safety margin of 2%, while Taiwan’s Gross Domestic Product (GDP) was likely to expand by 5.08%.

The term “inflation” appeared in the minutes of the bank’s June meeting 29 times, an indication of how seriously its board members are taking the issue, UDN reported.

Globalization had allowed manufacturers to choose countries with the lowest costs to base their factories. While the trend was unlikely to be reversed, changes could result in price rises both for production and transportation, and ultimately for the products themselves, a Central Bank board member said.

Rising oil prices were an even more important factor for a small, open economy like Taiwan’s, responsible for pushing its CPI up by 2.48% in May. The National Development Council’s economic plan for 2021-2024 was based on an inflation rate ranging from 1% to 1.5%, with Taiwan’s situation comparable to that of Switzerland, which counted on its CPI growing between 0% and 2%.