COST OF LIVING/Low-middle income families see greatest impact from inflation: DGBAS

Taipei, May 17 (CNA) Low and middle income households have been worst hit by recent increases in inflation, with food items becoming the main source of expenditure for many, the Directorate General of Budget, Accounting and Statistics (DGBAS) said Tuesday.

In April, Taiwan's consumer price index (CPI) soared 3.38 percent from a year earlier, the highest growth since August 2012, when it surged 3.42 percent from a year earlier.

The April CPI marked the ninth consecutive month the index has remained above the 2 percent alert level set by the central bank, further eroding purchasing power among consumers who face more expensive products at a time when there has been a spike in the price of international crude oil and other raw material imports.

In the month, food prices rose 6.91 percent from a year earlier with the price of vegetables, eggs, fruit and meat up 27.70 percent, 21.39 percent, 13.74 percent and 5.90 percent, respectively.

In addition, the cost of dining out also rose 5.56 percent from a year earlier in April, the highest growth in 13 and a half years.

An official from the DGBAS told CNA that the average impact of CPI growth on low income households and middle income families stood at 3.64 percent and 3.45 percent, respectively, compared with the average 3.38 percent increase for all consumers in April, as food items have a comparatively higher weight in their purchases.

Take low income households as an example. According to the DGBAS, food items carried a weighting of 28.4 percent in the CPI calculation model in April, which contributed 2.08 percentage points to CPI growth for low income households.

On the other hand, the DGBAS official said, the average CPI growth for high income households only hit 3.18 percent in April, less than the average 3.38 percent for all households.

The official said food items carried a weighting of only 21.4 percent in the CPI calculation model last month, which contributed only 1.37 percentage points to CPI growth for high income households.

Compared with high income households, their low and middle income counterparts also buy food items more frequently so they feel the growth in inflation more, the official said.

In addition to food items, growing crude oil prices boosted local transportation and communications expenses by 5.01 percent with domestic fuel prices soaring 14.92 percent from a year earlier in April.

The DGBAS official said transportation and communications expenses carry a weighting of 15.9 percent in the average CPI for high income households, higher than the 10.5 percent and 12.7 percent weighting for low and middle income families.

However, high income households with deeper pockets feel the impact of rising gasoline prices less, the official added.