Taiwan's consumer inflation is expected to peak at higher-than-expected levels in July or August, as food prices reel from back-to-back typhoons this month, reports Reuters.
Tropical Storm Kalmaegi and Typhoon Fung-Wong ravaged Taiwan over the past two weeks, causing combined agricultural losses of T$1.5bn (US$49m).
Economists from JPMorgan, KGI Securities, Mega Securities and Standard Chartered expect July's inflation to be more than 5 per cent, slightly higher than June's 4.97 per cent, following the two storms. Mega had the highest forecast of 5.6 per cent, which would be a near a 14-year peak.
'With the typhoons, that will possibly accentuate, or magnify, the spike `in inflation` in July and August,' Grace Ng, an economist with JPMorgan, told Reuters.
Prices of food, which make up about a quarter of Taiwan's consumer price index, have been surging as the bad weather crushed supplies of fruit and vegetables. In some parts of Taiwan, prices of leeks rose by 40 per cent in a week, media reported.
'Nobody wants to buy leafy vegetables because prices have gone up so much. They are buying melons instead,' one trader told Reuters. 'Some people bought vegetables in bulk a few days ago because they were afraid prices will go up further,' she added.
However, economists largely expect inflation to ease gradually from September onwards due to high base measurements during the same period last year, when the weather was exceptionally unfavourable.
'We'll have a more gradual decline,' said Tony Phoo, an economist at Standard Chartered, referring to inflation in the fourth quarter.
