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Consumer confidence slips over tax row, inflation concerns

2012/04/27 19:06:26

Taipei, April 27 (CNA) Consumer confidence in Taiwan declined for the first time this year in April amid mounting concerns over inflation and a capital gains tax controversy, a monthly survey revealed Friday.

The Consumer Confidence Index (CCI), compiled by the Research Center for Taiwan Economic Development at National Central University, stood at 78.92 points in April, down 2.34 points from the previous month.

"It marks the index's first downward adjustment since the beginning of this year, with consumer confidence in the stock market showing the steepest fall," said Dachrahn Wu, the center's director.

The benchmark index gauges consumer confidence in the stock market, household finances, durable goods, job opportunities, consumer prices and the general economic outlook over the next six months.

In the latest monthly survey, only the job market sub-index posted a marginal increase of 0.6 points, while the five other indicators fell from their March levels, Wu said.

The stock market confidence sub-index shed 5.4 points to 59.1 points amid debate over government plans to begin imposing a capital gains tax on stock investments.

"Although the Executive Yuan has already unveiled its version of the controversial tax, it remains unclear when and whether it will clear the legislative floor," Wu said.

He expected consumers to remain pessimistic over the stock market's prospects in the months ahead, particularly if transaction volume shrinks further.

A combination of other factors such as global economic uncertainties, eurozone debt problems and downward adjustments of Taiwan's 2012 economic growth rates by several local think tanks could also affect consumer confidence in the local stock market.

The confidence sub-index on consumer prices posted the second sharpest drop of 3.3 points to 52.05 points, according to the center's survey.

"The drop reflects rising consumer concerns about inflation after rises in fuel prices early this month and looming hikes in electricity rates from mid-May," Wu noted.

The confidence sub-indexes on household finances, durable goods and domestic economic outlook fell 3.2 points, 1.55 points and 1.1 points, respectively, according to the survey.

The April index was based on a survey of 2,438 people over the age of 20. It was conducted April 19-21 and had a margin of error of plus or minus 2 percentage points.

(By Lin Hui-chun and Sofia Wu)