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A nosedive in food prices pushed consumer prices in Taiwan into contraction last month – if only just – for the first time since August 2015 in spite of a steady rise in fuel prices.

Taiwan’s consumer price index dropped 0.04 per cent year on year in February according to the Directorate-General of Budget, Accounting and Statistics. That was down from 2.25 per cent in January and below a median estimate of 0.5 per cent growth from economists surveyed by Reuters.

Food prices dropped 0.75 per cent year on year, with the cost of vegetables falling more than 37 per cent after having spiked more than 20 per cent in the previous month. Fuels and lubricants prices rose 26.4 per cent year on year, basically steady from January.

Core CPI, which strips out more volatile food and energy prices, rose just 0.17 per cent, softening from January’s rise of 1.65 per cent, with the cost of nursing care falling more than 30 per cent after jumping over 45 per cent in January. Entertainment expenses fell almost 3.8 per cent after rising by roughly as much the previous month.

Upstream price growth softened, with Taiwan’s wholesale price index rising 2.19 per cent year on year from 2.72 per cent a month prior, largely driven by gains from fuel and commodities.

Prices for computers and electronic and optical products – a key component of exports – dropped 6.1 per cent. That tracked with a drop of 1.67 per cent for export prices.

Crude petroleum and natural gas prices rose 57.27 per cent, down about 5 percentage points from January, while quarried and mineral product prices accelerated slightly to a rise of 32.02 per cent – both thanks in large part to a base effect from commodity prices, which hit multi-year lows in late 2015 and early 2016.

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