TIER: If Fuel and Electricity Subsidies Fail, CPI Could Top 3% and the Central Bank Would Have to Raise Rates
Chang Chien-yi, president of the Taiwan Institute of Economic Research, warns that if the Legislative Yuan does not pass a supplementary budget to subsidize CPC and Taipower, fuel and electricity prices could rise and inflation could climb.
- Chang Chien-yi, president of the Taiwan Institute of Economic Research, said that if the fuel and electricity subsidy budget is not passed, CPI could exceed 3% and the central bank would have to raise interest rates.
- The CPI increase rate is forecast at 2.05% for 2026 and 1.94% for 2027.
- Chang said CPC and Taipower have accumulated losses of about NT$460 billion combined, and that price hikes would affect 23,000,000 people.
The Taiwan Institute of Economic Research (TIER) held its "2027 Economic Outlook and Industry Trends Seminar" on November 9, 2026, and released its latest forecasts. The consumer price index (CPI) increase rate is forecast at 2.05% for 2026 and 1.94% for 2027, meaning the 2027 year-on-year CPI increase is 0.11 percentage points lower than in 2026.
In the first nine months of 2026, CPI rose 1.94% year on year on average, the single-month year-on-year rate rose to 2.73% in September, and core CPI rose 2.15% year on year on average over the first nine months. Since May, the single-month year-on-year rate has mostly stayed above 2%. Chang believes the central bank did not raise interest rates in 2026 because the inflation rate was still just above 2%, and that a fall to below 2% in 2027 is still manageable.
Chang said Taiwan's prices are relatively stable mainly because CPC and Taipower act as "breakwaters," absorbing the pressure of rising international energy prices. As of September 2026, Taipower's accumulated losses were about NT$370 billion and CPC's were about NT$91 billion, about NT$460 billion combined.
Chang said that if the Legislative Yuan does not pass a supplementary budget, fuel and electricity prices could both rise, and bottled gas prices could follow, pushing up operating costs for food businesses such as small eateries and the cost of eating out. If CPC and Taipower are made to raise prices to make up for their losses, it would affect 23,000,000 people and more than 1 million businesses, an impact far greater than the two companies' combined losses.
The subsidy and capital increase proposals for Taipower and CPC have been sent to the Legislative Yuan for review. Chang also cited Article 2 of the State-Owned Enterprise Management Act, saying that one of the important tasks of state-owned enterprises is "making life convenient for the people."
People who already have a mortgage or plan to take one out may want to follow the Legislative Yuan's review of the supplementary budget, because Chang said that if CPI exceeds 3%, the central bank would have to raise interest rates. Households that spend on eating out may also want to watch whether fuel, electricity and bottled gas prices are adjusted.
Calculator: extra monthly cost of a 0.125-point hike Rates are illustrative
At 2.000%: NT$45,424/month → at 2.125%: NT$46,417/month, NT$993 more per month
Quick quiz
2 questions; pick an answer to see the explanation
- Chang Chien-yi said that if the supplementary budget to subsidize CPC and Taipower is not passed, CPI could exceed what level, forcing the central bank to raise interest rates?
- As of September 2026, about how much did Chang Chien-yi say Taipower's accumulated losses were?
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Original：聯合新聞網 · We only post summaries and key points. Read the original for the full story.
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