Taiwan’s inflation slows post-holiday; BofA says CBC to remain on hold

Published 07/03/2025, 13:16
© Reuters

Investing.com -- Taiwan’s Consumer Price Index (CPI) inflation has shown a decrease, coming in at 1.58% year-on-year (yoy) in February, compared to 2.66% in January. This is largely in line with the projected estimate of 1.5%, but under the consensus of 1.8%.

The service price inflation, which had previously peaked during the holiday season, has notably reduced. Additionally, vegetable prices have seen a sequential decline as supply chains have recovered from disruptions caused by typhoons.

The core CPI inflation, which excludes vegetables, fruits, and energy, and accounts for 92.2% of the CPI basket, has also seen a slight moderation. It was recorded at 0.98% yoy in February, down from 1.65% in December.

When considering the combined figures for January and February, the headline and core CPI inflation were recorded at 2.1% and 1.6% yoy, respectively. This continues the trend of gradual moderation in inflation that has been observed since the second half of 2024.

Bank of America economists commented: "The headline inflation has moderated as we expected, confirming that the January pickup is more of a seasonal blip.

"While the potential electricity tariff hike in March/April could add to inflation expectation, we have not yet seen solid evidence of a strong demand-led inflation pickup. We continue to expect the core inflation to stay below 2%, and believe the moderate inflation adds to the case that the CBC would stay on hold in March."

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