Taiwan's headline consumer price index rose 0.38 percent on the month in October after advancing 0.63 percent in September, with the year-over-year increase picking up from 2.93 percent to 3.05 percent. This increase in headline inflation reflects the impact on adverse weather on fresh food prices, with fruit and vegetable prices increasing on the year by 14.55 percent and 12.32 percent respectively. Core CPI, which excludes fruits, vegetables, and energy prices, rose 0.62 percent on the month in October after increasing 0.16 percent in September, with the year-over-year increase increasing slightly from 2.48 percent to 2.49 percent.

Taiwan's central bank, the Central Bank of China, left its benchmark discount rate unchanged at 1.875 percent at its most recent quarterly policy meeting mid-September. Officials adjusted their 2023 inflation forecasts slightly lower, with their forecast for headline inflation revised down from 2.24 percent to 2.22 percent and their core inflation forecast revised up from 2.38 percent to 2.44 percent. Officials concluded that keeping policy on hold was appropriate given their assessment that price pressures are likely to moderate and the economy to grow at a subdued pace over the medium-term.

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.

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.