(Bloomberg) -- Core inflation in Taiwan posted its biggest rise in 13 years, an indication that the government's efforts to battle rising prices are falling short and raising expectations that the central bank act sooner than expected.
Core consumer prices, measured by a basket of goods and services excluding vegetables, fruit and energy costs, increased 2.4% in January, the fastest acceleration since January 2009, according to the Cabinet's statistics bureau. CPI rose 2.8%, just below November's eight-year high and the sixth straight month of 2%-plus increases, the longest stretch since the global financial crisis in 2008.
“In terms of impact on the public, Taiwan's 2% inflation is just as great as the U.S. with its 7% inflation,” Dachrahn Wu, a professor of economics at Taoyuan-based National Central University, said in a telephone interview Friday. “The growth in real household income in Taiwan has stopped, meaning the difference between people's income and their expenses has been wiped out.”
Taiwan's government has adopted a range of extraordinary measures in an effort to keep prices in check. Through state-controlled energy company CPC Corp, officials have frozen fuel and gas prices for residential users as well as temporarily scrapping sales and import duties on key staples such as corn, wheat and soy beans.
Traders and economists are increasing their bets that persistent inflation will force Taiwan's policymakers to follow the lead of the Federal Reserve and other major central banks in raising rates this year. Borrowing costs have been at a record-low 1.125% since early 2020.
Several members of the central bank's board pointed to inflation as an increasing concern and suggested raising rates as early as March, according to the minutes of the bank's December policy meeting.
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