Taiwan: Upbeat June CPI inflation tests CBC patience

Research evidence excerpt

Taiwan: Upbeat June CPI inflation tests CBC patience

Tingting Ge Asia Pacific Economic Research J P M O R G A N(852) 2800-0143 07 July 2026

tingting.ge@jpmorgan.com

pricing power and limited ability to pass the energy costs through. However, given the supply-

demand tightness in electronic parts/devices, we expect a higher pass-through rate, posing

upside risk to relevant CPI components.

CBC’s wait-and-see stance is tested

Inflation sits at the top of the CBC’s watch list, and June’s upside CPI surprise raises (though does

not yet validate) the risk of a hike. We see much of the strength as transitory, led by summer

electricity tariffs (a 22.21% m/m jump in June that could reverse in October), weather-hit

vegetables, and Dragon Boat Festival timing effects alongside holiday tourism pricing.

Meanwhile, the downgrade in Brent forecasts following the signing of the US-Iran MoU should

help ease the energy-cost impulse. As a result, the 2.6%oya June reading could prove to be the

recent peak, with some moderation in 2H.

The key swing factor is whether inflation expectations begin to firm, supported by equity-wealth

effects and improving non-tech wage growth. Our CPI profile still implies around 2.1%y/y on

average this year, with prints above 2%oya in the near term. Externally, the reopening of the Strait

of Hormuz and a more hawkish Fed tilt leave a mixed backdrop. Rather than moving pre-

emptively, the CBC appears more comfortable maintaining a wait-and-see stance. While June

marginally lifts the likelihood of a hike before year-end, we keep a hold in the baseline given the

one-off nature of the drivers and the expected inflation moderation in coming months.

Taiwan: CPI inflation breakdown

%-pt contri. to %oya growth

4 Food Housing Transport & Comm Edu & Entertain Others

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