Macroeconomic Forecast Taiwan

Taiwan's headline consumer price inflation (CPI) accelerated in May to 1.7% year-on-year (y-o-y) from 1.3% in April, hitting the highest level in 15 months. The pace of increase was quite broad-based across the sub-indices, but food (26.1% share of the CPI basket) and clothing (4.2%) were the key drivers, surging to 2.8% and 3.1% y-o-y in May from 1.9% and 2.3% respectively in April. With economic activity still healthy, we expect to see persistent price pressure keeping inflation elevated in the near term. However, inflation should not pose a threat to the economy, and we do not expect it to exceed 2.0% this year.

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