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May 23, 2017

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Experts expect unemployment, inflation to raise 'misery index'

Taiwan's so-called "misery index" for July is expected to surpass 6.0, on rising inflation and unemployment, experts said yesterday.

The figure for August may rise again in the wake of higher consumer prices triggered by typhoons, they said, adding that the misery index is expected to stay high throughout the second half of 2012 and may be more palpable to people in the low-income bracket.

The misery index is the sum of a country's unemployment figure and consumer price index (CPI). While it is not an official statistical gauge, it in some ways measures the pain and misery felt by the people.

According to data of the Directorate General of Budget, Accounting and Statistics (DGBAS), June's unemployment figure was 4.21 percent and CPI 1.77 percent, translating into a misery index of 5.98. With July's CPI at 2.46 percent, unemployment for the previous month needs to be below 3.54 percent to keep the misery index below 6, a highly unlikely scenario, according to experts. The DGBAS will announce July's unemployment Wednesday.

"Unemployment might have risen slightly in July, as college graduates were still out there looking for jobs," said Luo Wei, senior deputy manager of the economic research center under Fubon Financial Holding.

"If nothing unusual happens, July's misery index will definitely exceed 6," he added. "As for August, the number will still be at a high, on surging consumer prices after all the typhoons."

He also cited several factors that may continue to keep prices at a high in the second half. These factors include a rise in grain prices after the droughts in the United States, India and Russia. Oil prices are also set to increase on tensions in Syria and frequent hurricanes in the Western Atlantic.

"Once unemployment goes over 4.5 percent and CPI over 2 percent, you'll have a misery index of 6.5, which will definitely be felt by a wider segment of the population," he said.

Fu Ming-tsai, chief economist with Standard Chartered, said unemployment in the second half should not experience a significant hike. What people should be more concerned about is the CPI, he said.

As the year progresses, more expensive oil and a second wave of power hikes will result in a misery index rise, which will be more palpable to the low-income bracket of the society, he said.

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