Inflation in Taiwan

A short history of inflation in Taiwan

Hyperinflation and the New Dollar (1945 to 1949)

The old Taiwan dollar was destroyed by the hyperinflation of the Chinese civil war, and on 15 June 1949 it was replaced by the New Taiwan dollar at forty thousand to one. The monetary conservatism that followed outlasted the memory of what had caused it.

The Stability Record (1981 onwards)

Taiwanese inflation has not exceeded 7% since, and the reasons are partly structural: persistent current account surpluses, a large manufacturing base whose costs fall over time, and administered prices for electricity and fuel that the government has used to smooth import shocks rather than pass them straight through. The effect was visible in the 2020s, when Taiwanese inflation stayed low while most of the world's rose.

Post-Covid Inflation (2021 to 2023)

In Taiwan, prices rose fastest in June 2022, at 3.6%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.