Price hike eats into Taiwanese's real earnings

Updated 2016-12-23 13:59:23 Xinhua

Average real monthly earnings in Taiwan fell 1.03 percent in the first ten months in 2016 from a year ago, as consumer price increases outpaced income growth, the island's statistics agency said on Thursday.

During January-October, the average real monthly earnings of employees in Taiwan climbed to a record high of 49,400 new Taiwan dollars, up 0.26 percent year on year.

However, consumer price increased 1.3 percent during the same period, cutting into the real earnings data which factored in inflation.

Taiwan's major think tanks expected the island's economy to grow above one percent in 2016, a breakthrough from slimmer growth or even contraction in the past years.

The statistics agency said earlier this month that Taiwan's Consumer Price Index (CPI) increased 1.97 percent in November from a year ago, the highest in nearly eight months. Vegetable prices led the increase due to extreme weather.

In the first 11 months this year, food prices rose 5.31 percent, the biggest increase in nearly eight years.

Analysts said decline in real earnings will cap consumer spending on the island, which is undesirable for Taiwan to rebalance between export and consumption.

The Taiwan Research Institute said in its latest report that consumers have become more pessimistic and are accustomed to saving more and spending less.

It forecasted private consumption to grow 1.91 percent and 1.72 percent, respectively, in 2016 and 2017, sharply lower than that recorded in the past years.

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