For the second consecutive month, Taiwan’s inflation has breached the 2% alert level, a threshold closely monitored by the central bank, signaling continued pressure on consumer wallets. The Directorate General of Budget, Accounting and Statistics (DGBAS) reported a 2.03% year-on-year rise in the Consumer Price Index (CPI) for April 2025.
While the headline figure slightly moderated from March’s 2.32%, it underscores a persistent upward trend in essential living costs, particularly food and dining, influenced by both local supply challenges and global economic shifts.
🔍 What’s Driving Taiwan’s Inflation?
🥭 Food Prices Lead the Surge
- Food prices jumped 4.34% in April compared to a year ago.
- Fruit prices soared by 25.26%, driven by seasonal shortages and supply chain limitations following early-year weather disruptions.
- Meat and bakery goods rose by 4.46% and 3.38%, respectively.
- Dining out costs increased 3.48%, the sixth consecutive month above 3% — a clear sign of entrenched service-sector inflation.
👉 Food price hikes alone contributed 1.17 percentage points to overall CPI growth, accounting for more than half of the total increase.
🏠 Living Costs and Rent Trends
- Overall living expenses rose 1.89%, with rent prices up by 2.40%.
- However, rent increases slowed down slightly from March’s 2.49%, suggesting a potential plateau in the housing sector.
🛒 Government-Monitored Daily Essentials
- The basket of 17 key household necessities (e.g., rice, eggs, shampoo) climbed 0.87%, up from March’s 0.75%.
- This reflects slow but steady price creep on everyday items that affect the majority of households.
🌐 Global Factors and Currency Impacts
📉 Producer and Trade Price Indices
- Producer Price Index (PPI) rose 0.93% YoY, due to higher agricultural, fuel, and component costs.
- The Import Price Index declined 2.13% (NT$ terms) and 2.94% (USD terms) — its 30th consecutive month of YoY decline.
- Export prices also dropped 0.15% (NT$) and 0.98% (USD).
💵 Taiwan Dollar Appreciation & Trump Tariffs
- The rapid appreciation of the Taiwan dollar is expected to reduce import costs, but with a lag of 1–2 quarters before consumers benefit.
- The Trump administration’s April 2 “reciprocal” tariff policy, despite a 90-day enforcement delay, has triggered concern over global demand, pushing down international commodity prices — including oil.
This may ease imported inflation for Taiwan but poses questions about export competitiveness, especially in electronics and machinery.
📈 Core Inflation Insights
- Core CPI (excluding volatile items like food and energy) rose 1.66% YoY in April.
- For the first four months of 2025, CPI averaged 2.15%, and core CPI 1.64%, both above historical norms.
🧠 Unique Commentary & Analysis
While Taiwan’s inflation remains modest by international standards, its structure reflects a dual challenge:
- Imported pressure from global food supply chains and energy volatility.
- Persistent domestic service inflation, especially in hospitality and dining, despite the Taiwan Power Company holding back electricity rate hikes in April.
The delayed impact of currency appreciation and potential global raw material price dips may provide relief in late Q2 or Q3, but the ongoing labor shortages and wage increases could sustain inflation in the service sector.
In the bigger picture, the real risk is inflation becoming “sticky” in everyday services, even as goods prices stabilize — a trend seen globally.
❓ FAQs
Why did Taiwan’s inflation stay above 2% in April 2025?
Mainly due to a sharp rise in food prices — fruit (25.26%), meat (4.46%), and dining out (3.48%) — along with gradual increases in rent and household goods.
What is Taiwan’s core inflation, and why is it important?
Core inflation, which excludes food and energy, rose 1.66% in April. It reflects underlying, persistent inflation trends that aren’t affected by temporary price shocks.
Will Taiwan’s inflation continue rising?
Not necessarily. Falling international commodity prices and the appreciating Taiwan dollar could ease pressure, but services and food inflation remain concerning.
How are global tariffs affecting Taiwan’s inflation?
The new U.S. tariffs have weakened global demand, lowering raw material prices. This might help Taiwan control import-related inflation but could impact export earnings.
How are households being impacted?
Households are paying more for everyday essentials and dining out. Although import prices are falling, consumers may not feel relief for another quarter or two.
