Taiwan Minister warns of 3% inflation if energy costs are passed to consumers

Taiwan's Minister of Economic Affairs, Kung Ming-hsin, stated that if international energy price increases are fully reflected in domestic prices, the Consumer Price Index (CPI) would exceed 3%. Speaking at a Legislative Yuan Economic Committee meeting, Kung noted that current CPI growth is around 2%, but a 10% rise in oil prices or electricity prices would increase the CPI by 0.24 and 0.27 percentage points, respectively.

Kung explained that state-owned enterprises Taipower and CPC Corporation Taiwan have absorbed a portion of rising international energy costs to stabilize domestic prices and protect citizens from inflation. This has resulted in significant financial losses and debt for both companies. He defended the government's use of budget subsidies to support these enterprises, arguing that such measures are necessary to ensure a stable energy supply and maintain price stability.

To provide global context, the Ministry of Economic Affairs highlighted that many nations use similar fiscal measures to manage energy volatility. Examples include Germany, France, and Japan, which have utilized large-scale budget subsidies to offset electricity and fuel costs following geopolitical conflicts.