Central bank raises Taiwan's 2026 CPI growth forecast to 1.93%

Taipei, July 9 (CNA) Taiwan's central bank has raised its 2026 growth forecast for the consumer price index (CPI) to 1.93 percent, citing higher than expected inflation in the second quarter.

In the second quarter, the domestic CPI rose by 2.17 percent, while the core CPI, which excludes fruits, vegetables and energy, grew 2.15 percent, the central bank said in a written report submitted to the Legislature ahead of a committee hearing slated for Thursday.

The bank said the increases were slightly higher than its earlier forecast of 2.1 percent and 2.06 percent, respectively.

In its report, the central bank raised its CPI forecast for the whole year from 1.91 percent to 1.93 percent, and hiked its projection for the core CPI from 1.90 percent to 1.92 percent.

Taiwan's CPI rose by 2.60 percent year-on-year in June, marking the second consecutive month of increase after a 2.20 percent hike in May, due to a spike in fuel prices amid tensions in the Middle East and soaring vegetable prices that resulted from adverse weather in Taiwan, according to the central bank.

The central bank said the government has implemented price stabilization measures to ease the inflationary pressure so the CPI growth in the first half of the year was a mild 1.7 percent, below the 2 percent alert threshold it had set.

With crude oil prices showing signs of easing, the bank said, domestic fuel prices, transportation services costs and tourism expenses may fall later this year.

Domestic inflation will stay under control in the third and fourth quarters of the year, the central bank forecast, adding that imported inflation also appears to be under control.

According to the Directorate General of Budget, Accounting and Statistics (DGBAS), the local CPI growth could 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.