Taiwan’s Inflation Slowed to 11-Month Low in January

(Corrects headline to say inflation slowed.)

Taiwan’s inflation slowed the most in nearly a year, increasing the central bank’s scope to hold interest rates to boost growth.

Consumer prices rose 1.15 percent in January from a year earlier, after climbing a revised 1.6 percent in December, the statistics bureau said in Taipei today. The median of 15 estimates in a Bloomberg News survey was 1.4 percent.

The easing supports central bank Governor Perng Fai-Nan’s decision to hold the benchmark rate at 1.875 percent in December after inflation slowed from a four-year peak in August. Perng begins a fourth five-year term at the end of the month, with data last week showing the economy expanded more than estimated in the fourth quarter as exports recovered.

“As the output gap will remain negative in the next one to two quarters, inflation will remain benign,” Ma Tieying, a Singapore-based economist at DBS Group Holdings Ltd., said before the report. “The central bank will be allowed to keep monetary policy accommodative.”

The Taiwan dollar rose 0.3 percent to NT$29.58 against its U.S. counterpart in Taipei yesterday, the biggest gain since Sept. 14, according to Taipei Forex Inc. The currency has weakened almost 2 percent this year.

The Lunar New Year celebration, which typically drives up costs of food and clothing, was in January last year. It is being observed in February this year.

Core consumer prices, a category excluding vegetables, fruits, fish and energy, advanced 0.33 percent from a year earlier. Wholesale prices, which track the cost of goods sold to retailers and producers, fell 3.81 percent.

To contact the reporter on this story: Sharon Chen in Singapore at schen462@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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