Taiwan's Cabinet said Thursday that it was closely monitoring the cost of goods but insisted the country's economic fundamentals remain strong, one day after the government reported that inflation had hit a 14-year high.
At a news conference, Cabinet spokesman Lo Ping-cheng (???) said the rise in consumer prices was largely being driven by global factors, such as the Russia-Ukraine war and uncertainty surrounding COVID-19.
However, the fundamentals of Taiwan's economy remain strong, Lo said, citing stable growth in exports and private consumption, as well as total investment projected to reach 26.82 percent of GDP in 2022.
While the government prefers to let market forces dictate price adjustments, it is monitoring the situation closely and will not hesitate to act against instances of price gouging or hoarding and profiteering, Lo said.
Lo was responding after the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported Wednesday that Taiwan's consumer price index (CPI) rose by 3.59 percent in June year-on-year, marking its highest level since September 2008.
According to the DGBAS, the core CPI - which excludes volatile food and energy prices - increased to 2.77 percent last month, while the average CPI of 17 major items used in daily life hit 5.39 percent.
In terms of specific items, the price of eggs surged by 33.57 percent annually and cooking oil prices rose by 14.39 percent, the DGBAS said, while the price of eating out increased by 6.38 percent.
In response to the report, the Ministry of Economic Affairs announced Thursday that it would extend a range of financial relief measures for businesses located in industrial technology parks, as well as some restaurants and private preschools, through the end of the year.
Meanwhile, Taiwan's main opposition Kuomintang (KMT) seized on the report to slam the government for what it characterized as its lack of preparation and flat-footed response to the financial burden caused by rising prices.
Despite President Tsai Ing-wen's (???) recent claim that Taiwan's economy was the strongest it has been in years, many of Taiwan's 600,000 low-income households are struggling to make ends meet, the party said in a press release.
In order to mitigate the impact of inflation, the Tsai government must expand subsidies to those who are most vulnerable, including low-income households, blue-collar workers, and small and medium enterprises, the KMT said.
In a slightly more positive assessment, Taiwan Academy of Banking and Finance (TABF) Chairman Wu Chung-shu (???) predicted Thursday that while inflationary pressure could push the global economy into a brief recession, the worst of the current inflationary woes could be over by next year.
Wu said he expected the recovery to happen even sooner in Taiwan, where inflation has been milder and mostly tied to imported goods, possibly allowing for a return to a sub-3 percent CPI by the fourth quarter of this year.
The TABF is a non-profit organization established by the Financial Supervisory Commission, Taiwan's top banking, securities, and insurance regulator.
Source: Focus Taiwan News Channel