07.06.2001
Inflation still at bay

• Development: The CPI declined 0.2% YoY, resulting in flat YoY growth for 2Q01, down from 0.6% in 1Q01. The WPI also fell 0.2% YoY.

• Analysis: In the absence of recovery in domestic demand, goods prices declined 1.4% YoY. A 1.3% rise in the services index offset some deflationary pressure. In line with the depreciation of the NT$, the export price index, in US$ terms, fell 8.3% YoY.

• Primasia View: Unemployment is still at all time highs, taking away inflationary pressure from wages, as well as depressing consumer demand. We forecast CPI growth will come in below 0.5% YoY in 2001 and maintain that real interest rates need to come down further.

IrmakSurenkok@Primasia.com +886-[0]2-2547-8873