Taiwan June consumer inflation hits near 14-year high

TAIWAN'S inflation rate hit a near 14-year high in June, with the consumer price index (CPI) expanding 3.59 per cent from a year earlier, more than market expectations.

The pace quickened from the 3.39 per cent year-on-year reading for May, the Directorate General of Budget, Accounting and Statistics said in a statement on Wednesday (Jul 6), and was slightly worse than economists' predictions in a Reuters poll for a 3.5 per cent increase.

It was the highest monthly reading since August of 2008, when CPI rose 4.68 per cent, and will likely add to pressure to further raise interest rates.

Core CPI, a better measure of underlying price pressures, rose 2.77 per cent on year from 2.60 per cent in May. It excludes more volatile energy, vegetable and fruit prices.

Taiwan's central bank raised its policy rate in June for the second time this year, reflecting concerns about quickening inflation, and also trimmed the trade-reliant island's growth outlook for 2022.

Analysts had expected one or 2 more modest rate hikes in the second half of the year.

Price pressures are still much more moderate than in the United States and Europe, however, and Taiwan's export-reliant economy has been supported by a global shortage of semiconductors that has filled Taiwanese chip-makers' order books.

On Tuesday, South Korea reported that its inflation last month hit a 24-year high, growing a slightly faster-than-expected 6.0 per cent in June over a year earlier - the highest since November 1998.

The government says Taiwan's economic fundamentals remain sound, even as the stock market has swooned, pointing to its world-leading semiconductor industry.

Earlier on Wednesday, chip maker United Microelectronics, whose clients include Qualcomm and Germany's Infineon, reported June sales soared 43.2 per cent on-year, with first half sales leaping 38.2 per cent year-on-year. REUTERS