Taiwan Inflation Lowest In Over 4 Years, Trade Surplus Grows

(RTTNews) - Taiwan's consumer price inflation eased in June to the lowest level in more than four years, data released by the Directorate General of Budget, Accounting, and Statistics showed on Tuesday.

Separate official data showed that the country's trade surplus increased notably in June from a year ago as exports grew faster than imports.

The consumer price index climbed 1.37 percent year-on-year in June, slower than the 1.55 percent rise in May.

Further, this was the slowest CPI inflation since March 2021, when prices had risen 1.21 percent.

Food inflation moderated to 2.82 percent in June from 3.1 percent in May, and housing charges rose at a slower pace of 1.76 percent. A 0.87 percent decline in clothing prices also contributed to the slowdown in inflation.

On a monthly basis, consumer prices rose a seasonally adjusted 0.25 percent in January after a 0.27 percent increase in the prior month.

At its June meeting, Taiwan's central bank retained its key interest rate at 2.0 percent as the policy board observed that the current rate level would help sustain sound economic and financial development on the whole.

"While inflation has not necessarily been the most significant consideration in recent monetary policy decision-making, inflation has been more or less near the target range for much of the past year, while only recently dropping noticeably under target," Lynn Song, an economist at ING, said.

"A further drop in June inflation probably won't raise the urgency to cut rates but combined with the recent strengthening of the Taiwan dollar, these conditions create a suitable environment for the CBC to ease if it deems it necessary."

The trade surplus rose to US$12.07 billion in June from US$4.7 billion in the corresponding month last year, preliminary figures from the Ministry of Finance revealed.

Exports grew 33.7 percent year-over-year in June, and imports climbed by 17.3 percent.

Outflows of information, communication, and audio-video products jumped by 82.5 percent, while imports of the same grew by 56.3 percent.

Looking ahead, the developments in terms of tariffs could play a significant role in Taiwan's trade and growth trajectories in the second half of the year, the ING economist said.