TAIPEI (Taiwan News) — Taiwan’s Central Bank said inflation remains under control, despite rising global energy prices linked to Middle East tensions.
In a recent report, the Central Bank said that although the Iran war pushed up crude oil prices and increased import costs, Taiwan's imported inflation has remained manageable. This is due in part to exchange rate stabilization efforts and seven government supply-side measures, per Liberty Times.
The consumer price index rose 1.23% year-on-year in the first quarter, indicating mild inflationary pressure.
The Central Bank warned that persistently high oil prices have heightened global inflation risks. International organizations, including the International Energy Agency, the Organization for Economic Cooperation and Development, the International Monetary Fund, and the World Bank, have all cautioned that the current energy crisis is severe and requires careful management.
Domestically, higher global prices have raised the cost of imported raw materials and commodities. From January to March, import prices in US dollars rose 4.31% year over year.
The report also noted that global demand for safe-haven assets has strengthened the US dollar, leading to a depreciation of the Taiwan dollar. From Feb. 27, before the war, to April 10, the Taiwan dollar weakened by about 1.5% against the US dollar.
The Central Bank said it will continue to intervene in the foreign exchange market when necessary to maintain exchange rate stability. A stable currency helps businesses manage pricing and operations, reduces hedging costs, and helps contain imported inflation and inflation expectations.
It added that government efforts to stabilize prices have helped keep inflation in check, with CPI growth remaining modest in the first quarter.
The government rolled out seven supply-side measures to ease price pressures. These include maintaining some of the lowest fuel prices in Asia through a dual mechanism to absorb oil price increases; extending tax reductions on key raw materials through the end of September; expanding commodity tax cuts on gasoline and diesel to 50%; halving the commodity tax on bottled gas starting in April; freezing residential natural gas and bottled gas prices; keeping electricity rates unchanged from April to September; and maintaining stable public transportation fares.
