Taipei: Taiwan's inflation is projected to fall below 2 percent by 2026, despite the consumer price index (CPI) hitting a 17-month high of 2.60 percent in June, according to central bank Governor Yang Chin-long. Speaking with reporters, Yang noted that the decline in international crude oil prices to nearly US$70 per barrel reduces the risk of imported inflation for Taiwan. He affirmed, "I think CPI growth will remain under 2 percent," while emphasizing the central bank's ongoing vigilance in monitoring consumer price trends.

According to Focus Taiwan, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported that June's CPI increase was the highest since January 2025, marking the second consecutive month of inflation exceeding 2 percent after May's 2.20 percent rise. For the second quarter, the CPI grew by 2.17 percent. Despite the spike, Yang highlighted the alignment between the central bank's expectations and actual CPI growth.

In mid-June, the central bank forecasted a 1.91 percent CPI growth for the entire year. After a 1.23 percent increase in the first quarter, the bank projected CPI growth of 2.1 percent in the second quarter, 2.22 percent in the third, and 2.1 percent in the fourth. The DGBAS noted that domestic fuel prices remained elevated despite a late-June decline in international crude prices. Fuel prices rose 19.45 percent in June, while air ticket prices increased by 13.49 percent, and vegetable prices surged by 10.05 percent due to adverse weather conditions.

DGBAS senior executive officer Tsao Chih-hung echoed Yang's sentiments, predicting that inflationary pressures would diminish with declining crude oil prices. June's CPI was also influenced by rising memory chip prices, which increased costs for computers and education equipment by 7.39 percent, a record monthly spike for the category in over 44 years. However, Tsao downplayed the impact of tech gadgets on the overall CPI due to their minor weighting.

Despite expectations of CPI growth surpassing 2 percent in July, driven by expensive vegetables and fruit due to Typhoon Bavi, Tsao anticipated a slightly smaller increase than in June. The DGBAS in late May revised its 2026 CPI growth forecast to 1.93 percent, an increase of 0.25 percentage points from its February estimate.