Despite June CPI spike, inflation to go below 2% in 2026: Central bank

Taipei, July 8 (CNA) Taiwan's inflation will end up below 2 percent in 2026 even though the consumer price index's (CPI) growth in June hit a 17-month high of 2.60 percent, central bank Governor Yang Chin-long (楊金龍) said Tuesday.

Speaking with reporters, Yang said international crude oil prices have shown signs of falling to nearly US$70 per barrel, meaning Taiwan is not facing any risk of imported inflation.

"I think CPI growth will remain under 2 percent," Yang said, but added that the central bank will continue to monitor consumer price fluctuations.

Yang's comments came after the Directorate General of Budget, Accounting and Statistics (DGBAS) reported earlier Tuesday that the CPI grew 2.60 percent from a year earlier in June, the highest level since January 2025.

It was the second consecutive month in which inflation topped 2 percent after May's 2.20 percent.

In the second quarter, the CPI grew 2.17 percent, according to the DGBAS.

Yang said there was "no significant difference" between the central bank's expectations and actual CPI growth in June and in the second quarter.

In its most recent quarterly policymaking meeting in mid-June, the central bank forecast that Taiwan's CPI would grow 1.91 percent for the year as a whole.

After rising 1.23 percent in the first quarter, the CPI was expected by the central bank to grow 2.1 percent in the second quarter, 2.22 percent in the third and 2.1 percent in the fourth.

According to the DGBAS, although domestic gasoline and diesel prices moved lower in late June after international crude oil prices fell, local fuel prices for the month were still higher than a year earlier.

In June, fuel prices soared 19.45 percent and air ticket prices jumped 13.49 percent due to higher crude prices, while vegetable prices surged 10.05 percent as heavy rain cut production.

Echoing Yang, DGBAS senior executive officer Tsao Chih-hung (曹志弘) said inflationary pressures in Taiwan should ease over time due to a fall in crude oil prices.

The June CPI was also affected by a spike in memory chip prices, which made computers and peripheral devices more expensive and pushed up education equipment and tool expenses by 7.39 percent in June, the highest increase in the category in a single month in more than 44 years.

Tsao said, however, that these tech gadgets have a relatively low weighting in the total CPI and that their impact was limited.

Tsao expected CPI growth to still top 2 percent in July driven by more expensive vegetables and fruit due to disruptive weather brought by Typhoon Bavi but the increase could be slightly smaller than in June.

In late May, the DGBAS forecast Taiwan's CPI to grow 1.93 percent in 2026, up 0.25 percentage points from its earlier estimate made in February.