Imported Inflation Remains Manageable in Taiwan Amid Middle East Conflict: Central Bank

Taipei: Although the war in the Middle East has pushed up international energy prices and in turn caused domestic consumer prices to rise, Taiwan's central bank said such "imported inflation" has remained controllable. In a report submitted to the Legislative Yuan on Friday ahead of a legislative hearing, the bank said the Taiwan dollar's appreciation against the U.S. dollar has eased the impact on imported inflation. According to Focus Taiwan, in Taiwan, import prices rose 4.31 percent in U.S. dollar terms in the first three months of this year. However, the bank said the local currency's year-on-year appreciation against the U.S. dollar during the same period helped to limit import price growth in Taiwan dollar terms in the first quarter of this year to only 0.33 percent, indicating imported inflation did not spin out of control. The central bank, nevertheless, admitted that the U.S.-Israel war against Iran had sent international crude oil prices and other commodity prices higher, adding upward risks to g lobal inflation. Since the war in the Middle East erupted at the end of February, global investors have moved their funds to the U.S. dollar for hedging purposes, pushing down the Taiwan dollar by 1.50 percent against the greenback as of Friday. But the bank said that the Taiwan dollar's depreciation was moderate compared with the losses suffered by other non-U.S. dollar currencies. Citing the latest consumer price index (CPI) data, it said the CPI growth in the first three months of this year rose 1.23 percent from a year earlier, below a 2 percent alert level set by the bank. The central bank added that on the back of the government's price stabilization measures, local inflation remained mild. Still, it said it remained cautious about how the conflicts in the Middle East would evolve. The central bank said it will continue to monitor the war in the Middle East and adjust its monetary policy to stabilize exchange rates and mitigate the global impact of rising raw material prices. In March, the central ban k raised its forecast for Taiwan's CPI to 1.80 percent, up 0.17 percentage points from its previous estimate in December, taking into account a crude oil price spike and the government's price stabilization measures.