TAIPEI: Taiwan's consumer price index (CPI) in January rose 1.59 percent, year-on-year, climbing from a 1.5-year low hit in December, due to higher food prices during the Chinese New Year, data showed yesterday.

Taiwan's inflation has eased from a 14-year high in July 2008 as a deepening global recession dampens domestic consumption and pushes down oil prices, which could prompt the central bank to further lower rates after sixth-straight cuts.

The trend is similar for the rest of Asia, with South Korea's January consumer prices posting their lowest annual growth in 11 months, and Thailand's CPI falling in January for its first decline in more than nine years.

Food prices were higher in January compared with a year earlier because of better demand during the Chinese New Year, which fell in January this year after being in February last year.

Last month, food and housing prices respectively rose 5.46 and 2.45 percent, year-on-year, while entertainment and traveling climbed 1.75 percent, according to the directorate general of budget, accounting and statistics.

Anita Hsu, an economist at Masterlink Securities, said: "Higher prices in the service sector during the lunar new year helped the inflation rate from easing too much. But the downward trend will continue". She added that the figure will turn negative around May or June as domestic demand worsens and companies start cutting prices.

On a monthly basis, the January CPI was down 0.27 percent from the previous month due to lower vegetable and clothing prices, it said. The core price index, which excludes food and energy prices, rose 2.59 percent in January from a year earlier.

Agencies

(HK Edition 02/06/2009 page2)