| Actual | Previous | |
|---|---|---|
| Month over Month | -0.28% | 0.38% |
| Year over Year | 2.90% | 3.05% |
Highlights
Taiwan's headline consumer price index fell 0.28 percent on the month in November after advancing 0.38 percent in October, with the year-over-year increase moderating from 3.05 percent to 2.90 percent. Fruit prices increased but vegetable prices fell on the month as supply recovered from adverse weather conditions in October, while fuel prices also fell on the month. Core CPI, which excludes fruits, vegetables, and energy prices, fell 0.12 percent on the month in November after increasing 0.62 percent in October, with the year-over-year increase slowing from 2.49 percent to 2.38 percent.
Taiwan's central bank, the Central Bank of China, is scheduled to hold its quarterly policy meeting next week. At the last meeting, held mid-September, officials left the benchmark discount rate unchanged at 1.875 percent and adjusted their inflation forecasts slightly lower. 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.
Taiwan's central bank, the Central Bank of China, is scheduled to hold its quarterly policy meeting next week. At the last meeting, held mid-September, officials left the benchmark discount rate unchanged at 1.875 percent and adjusted their inflation forecasts slightly lower. 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.
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.
