| Actual | Previous | Revised | |
|---|---|---|---|
| Month over Month | 0.29% | -0.28% | -0.07% |
| Year over Year | 2.71% | 2.90% |
Highlights
Taiwan's headline consumer price inflation moderated from 2.90 percent in November to a four-month low of 2.71 percent in December, with the index advancing 0.29 percent on the month after a previous decline of 0.07 percent. The moderation in headline inflation was largely driven by a decline in food prices as supply recovered from previous adverse weather conditions. Core inflation, which excludes fruits, vegetables, and energy prices, increased slightly from 2.38 percent to 2.43 percent.
Taiwan's central bank, the Central Bank of China, held its quarterly policy meeting in mid-December, with officials leaving the benchmark discount rate unchanged at 1.875 percent. Officials published revised inflation forecasts at that meeting, with headline inflation forecast to fall from 2.46 percent in 2023 to 1.89 percent in 2024 and core inflation forecast to fall from 2.61 percent to 1.83 percent.
Taiwan's central bank, the Central Bank of China, held its quarterly policy meeting in mid-December, with officials leaving the benchmark discount rate unchanged at 1.875 percent. Officials published revised inflation forecasts at that meeting, with headline inflation forecast to fall from 2.46 percent in 2023 to 1.89 percent in 2024 and core inflation forecast to fall from 2.61 percent to 1.83 percent.
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.
