Taiwan’s consumer price index rose 2.33 percent year-on-year in October, below the Bloomberg consensus of 2.60 percent, according to Commerzbank strategists. The reading was lower than September’s upwardly revised 2.74 percent, and the softer result was led by food and energy prices.
Even so, the October figure marks the sixth consecutive month above the Central Bank of the Republic of China’s 2 percent alert threshold. Core CPI came in at 2.23 percent, against a consensus of 2.30 percent.
Producer prices surge
Producer prices told a different story. Taiwan’s producer price index rose 19.7 percent year-on-year in October, the fastest pace on record.
Commerzbank strategists said the gap between softening consumer prices and surging upstream costs suggests margin compression at the producer level remains acute. They added that pass-through to final consumer prices could not be ruled out in the months ahead.
Central bank steps into the currency market
The central bank confirmed it intervened in the currency market to cushion the Taiwan dollar against heavy foreign equity outflows. The CBC estimated net foreign outflows for the month at about $28 billion.
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Foreign exchange reserves fell by $4.3 billion in October, to $596.4 billion at month-end. The CBC also said it used dollar proceeds from the swap market to buy US Treasuries during the month, which limited the drawdown.
Source: Commerzbank
