Taiwan faces deflation as CPI contracts

Taiwan recorded deflation for two consecutive months this year, a similar pattern to the annual price declines of 2009 during the global financial crisis, Taiwan's statistical agency said on Monday.

The Consumer Price Index (CPI), a core measurement of inflation or deflation, dipped 0.19 percent year on year in February, following a year on year decline of 0.94 percent in January.

For the first two months of 2015, the CPI fell 0.56 percent year on year, according to the agency.

Meanwhile, the Wholesale Price Index (WPI) recorded its deepest decline in almost 65 months in February, slumping 8.49 percent from the same period last year.

On a monthly basis, the February CPI was up 0.36 percent but the WPI was down 0.32 percent from January.

The statistics agency attributed the deflation to international crude oil prices, which dragged on fuel costs in the local market, suggesting that the year on year CPI decline was a result of discounts in electricity bills and a higher comparison base seen over the same period last year.

However, higher food prices in February during the Chinese Lunar New Year holiday offset some of the CPI declines.

Excluding the prices of vegetables and fruit, the CPI fell 0.23 percent year on year in February. The index remained on an uptrend and rose 1.78 percent, excluding energy, vegetables and fruit, the agency said, in an attempt to allay concerns about any deflationary pressure.