| Actual | Previous | |
|---|---|---|
| Month over Month | -0.61% | 0.39% |
| Year over Year | 2.43% | 3.04% |
Highlights
Taiwan's headline consumer price index fell 0.61 percent on the month in February after an increase of 0.39 percent in January, with the year-over-year increase slowing from 3.04 percent to 2.43 percent. Core CPI inflation, which excludes fruits, vegetables, and energy prices, slowed from 2.98 percent to 2.55 percent.
The relatively big month-over-month decline in the CPI in February and the fall in headline inflation largely reflected the impact of the timing of lunar new year holidays. Combining January and February data, the CPI increased 2.74 percent over the same period last year, little changed from 2.71 percent in December, while core inflation for the first two months of the year was 2.77 percent, up from 2.60 percent in December
Taiwan's central bank, the Central Bank of China, increased its benchmark discount rate from 1.625 percent to 1.75 percent at its most recent quarterly policy meeting mid-December. Officials provided little guidance on the likelihood of additional policy tightening at that meeting, with their next meeting scheduled for next week.
The relatively big month-over-month decline in the CPI in February and the fall in headline inflation largely reflected the impact of the timing of lunar new year holidays. Combining January and February data, the CPI increased 2.74 percent over the same period last year, little changed from 2.71 percent in December, while core inflation for the first two months of the year was 2.77 percent, up from 2.60 percent in December
Taiwan's central bank, the Central Bank of China, increased its benchmark discount rate from 1.625 percent to 1.75 percent at its most recent quarterly policy meeting mid-December. Officials provided little guidance on the likelihood of additional policy tightening at that meeting, with their next meeting scheduled for next week.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Annual changes in the CPI represent the rate of inflation.
Description
An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from mortgages and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
Inflation (along with various risks) basically explains how interest rates are set on everything from mortgages and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
