Where the cost stops
Consumer prices in Taiwan were 2.04 per cent higher in August than a year earlier, and on the month they edged down 0.01 per cent, rising 0.13 per cent once seasonal patterns are removed. Producer prices over the same twelve months rose 16.75 per cent, and by 1.04 per cent on the month. The two series measure prices at different points of the same chain, and in August they disagreed about what the chain costs.[1]
The border tells the same story more sharply. The dollar import price index was 20.45 per cent higher than a year earlier and 2.66 per cent higher than in July; the export price index was 23.05 per cent higher over the year. A firm that buys inputs at the first of those prices and sells at the second moves the cost onto a foreign buyer, and the household index has no reason to stir.[1]
The barrel behind the border price
Brent crude rose 2.06 per cent to 99.22 dollars a barrel by 08:00 GMT, its strongest level since 24 July, and West Texas Intermediate gained 3.2 per cent to 94.60 dollars. Saudi authorities said operations at several energy sites had been suspended after strikes, among them Jizan, which hosts a 400,000 barrel-a-day refinery. Aramco had not commented when the report was filed.[2]
The two sets of figures meet at the same point. Taiwan's import price index is measured in dollars, so a crude price at 99.22 dollars a barrel registers there before it reaches any domestic invoice, and that index rose 2.66 per cent on the month. This is the channel behind a producer measure at 16.75 per cent standing beside a consumer measure at 2.04 per cent: the cost has entered the chain and has not been charged on to households.[1], [2]
Which balance sheet holds it
If the dollar import price index keeps rising at close to August's 2.66 per cent monthly pace through the fourth quarter, the producer measure will settle into one of two outcomes by the end of December: a consumer index above the 2.04 per cent recorded in August, or an increase that stays with the firms. The observable signal is the next monthly publication of the import and producer price indices.[1]
The gap also has readings that require no squeeze at all. Export prices rose 23.05 per cent over the year, faster than import prices at 20.45 per cent, which fits the cost travelling outward with the goods. The January-to-August averages carry the same shape, with producer prices at 9.10 per cent, import prices at 12.60 per cent and export prices at 16.59 per cent. Whether the household index stays near 2.04 per cent depends on which of those channels absorbs the next increment, and one month of data leaves that open.[1]