Slide in Commodity Prices Accelerates in Taiwan

Taipei, Jan. 7, 2009 (CENS)--Commodity prices in Taiwan have been dropping faster, with consumer prices dipping 1.85% in December from the previous month and wholesale prices down 3.79%, according to the Directorate General of Budget, Accounting and Statistics (DGBAS).

Compared to the peak in July 2008, wholesale prices have slid 15% by December. Rather, consumer prices dropped only 1.87% in the same period because retail prices have just begun slumping in the beginning of December 2008.

Wu Chao-ming, a DGBAS official, said the credit crunch caused by the global financial tsunami will lead continuous plunge in commodity prices.

With a 3.52% rise in consumer prices in 2008, the DGBAS predicted consumer prices will edge up 0.37% in 2009.

Wu noted if the continual drop in commodity prices is triggered by oversupply and sagging demand, wages, share prices, and employment will be negatively impacted.

National Taiwan University economics professor H.C. Lin said deflation is not good for such trend leads to reducing income levels.

The DGBAS tallies showed the consumer price index (CPI) and wholesale price index reached 104.77 and 100.45 in December 2008, up a mere 1.21% and down 9.11% year-on-year respectively. If such staples as vegetables, fruits and energy are excluded, the CPI inched up 2.07% annually in December 2008.

Although the CPI rose 3.52% year-on-year in 2008 to hit a record high since 1996, it has been shrinking since August that year. The DGBAS statistics showed the CPI grew only 1.21% year-on-year in December 2008, for the smallest growth since August 2007.