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Text: Huang Shuojie (Bachelor of Economics, National Chengchi University, Master of Economics, New York University) Yesterday, I saw on the key review website <The production cost has become higher and the price has to be raised? wrong! The data proves that Taiwanese companies actually just want to make more profits ” article, I can understand what the author wants to express, but the difference between the increase in the “Consumer Price Index” and “Producer Price Index” used in the article proves that “ Enterprises just want to make more profits.” The author believes that there are doubts, and the relevant explanations are given below. One of the reasons why Taiwan's CPI is twice as high as its PPI may be "industrial transformation"
The producer price index (PPI) is used to measure the "initial cost of production", while the consumer price index (CPI) is used to measure the "final consumption price". Due to the different economic structures of different countries, the price impact caused by upstream production, transportation to the final retail channel is also different. Take Europe mentioned wedding photo retouching services in the article as an example. European countries are an economic group with abundant raw materials and strong industries. Production costs have a greater impact on the overall economy and consumption performance. Therefore, the producer price index and the consumer price index have increased at the same rate. Very reasonable. If we compare South Korea, whose economic structure is more similar to that of Taiwan,
since 1981, South Korea's consumer price index has also grown by about twice as much as its producer price index. Why did the two indices gradually expand in Taiwan and South Korea after 1980? The author believes that the main reason is that both Taiwan and South Korea have transformed from the raw material and labor-intensive primary and secondary industries into high value-added secondary and tertiary industries since the 1970s and 1980s. Since technology, services and brand value are only reflected in final consumer prices, the increase in the CPI has also been much larger.
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