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Inflation concerns in Taiwan exaggerated: Singapore bank

2012/05/08 21:39:52

Taipei, May 8 (CNA) Concerns among the public over Taiwan's inflation caused by price hikes for fuel and electricity are exaggerated, as the level of inflation is still within a controllable range, Singapore's DBS Bank said in a report released Tuesday.

The Consumer Price Index (CPI) rose slightly from 1.2 percent in March to 1.4 percent last month, while fuel prices were hiked by an average of 10 percent, the bank said.

It predicted that Taiwan's CPI will climb by 0.3 percent in June and December month-on-month, respectively, while the inflation for May and June will fall to between 1 and 1.5 percent year-on-year.

For the second half of the year, the bank gave a forecast of 1.5 to 2 percent CPI growth year-on-year, and added that the CPI is not likely to exceed 2 percent unless typhoons have an impact on food prices.

However, the bank was more concerned over the risk of Taiwan's decreasing exports.

Overall, economic growth is slow and fragile in Taiwan, it said.

The annual export growth dropped to minus 6.5 percent in April from minus 3.3 percent in March.

In addition, the trade surplus has also shrunk from an average of US$1.9 billion between January and March to only US$700 million in April, according to the report.

In the short term, the bank said, the Taiwan's exports will also be affected by austerity drives in Europe and the slow economic recovery in China.

The bank predicted that Taiwan's Central Bank, which will hold a regular board meeting in June, will keep key interest rates unchanged.

(By Chao-fen Kao and Maia Huang)