Scholar says 4 factors affect Taiwan’s inflation

學者表示有4因素影響台灣通膨

Wages, green policies, energy prices, rent are factors, says Wu Dachrahn


TAIPEI (Taiwan News) — National Central University’s Department of Economics Professor Wu Dachrahn (吳大任) said four key factors will affect Taiwan’s inflation, CNA reported.

Wu’s comments came after Central Bank of Taiwan Governor Yang Chin-long (楊金龍) said that rising electricity prices could cause the inflation rate to exceed 2%.

“First is the energy problem,” Wu said. “With nuclear power plants gradually retiring, fossil fuel prices, such as natural gas, are vulnerable to geopolitical influences. Any disturbance can lead to high prices, increasing the cost of electricity generation."

The second factor is Taiwan’s retail and catering industry, Wu said. The industry is facing labor shortages, and wages will likely increase, so commodity prices might be higher.

Third, Wu said that Taiwan’s real estate has been rising since 2021, driving up rents, which will continue to affect the consumer price index (CPI).

“The housing index announced by the Directorate-General of Budget, Accounting, and Statistics for 2023 is 104.35, reaching a historical high, with the rent index at 103.88, a year-on-year increase of 2.16%, the highest in 27 years,” he said. “Previous analysis by real estate experts showed that this indicates that the costs people bear for housing have increased along with inflation."

The fourth factor is ESG (environmental, social, and governance) policies. “ESG is an international trend, and many companies are facing pressure to reduce carbon emissions. This will drive up production costs in the supply chain and reflect in the prices of end products,” he said.

Wu stressed that the central bank’s monetary policy may not stop “green inflation” and requires cooperation among industry, government, academia, and research institutions.