Korea Inflation


Inflation jumps to 20-month high

In October, consumer prices rose 0.17% over the previous month, which was well below the 1.12% increase recorded in September. Lower prices for culture and recreation, healthcare as well as clothing and footwear partially compensated for higher prices for food and non-alcoholic beverages, household equipment and transport. Despite the subdued increase, annual inflation stepped up half a percentage point, from 3.6% in September to 4.1%, surprising market analysts that had expected inflation to drop to 3.4%. The October rate marks a 20-month high, as inflation is now at the highest level since February 2009 Core inflation, which excludes more volatile items such as fresh food and energy, remained flat over the previous month. As a consequence, annual core inflation remained unchanged at September's 1.9%. The moving three-year average inflation rate, which is the basis of the Central Bank's monetary policy, rose for the first time in ten months, inching up from 3.4% in September to 3.5%, thus exceeding the Central Bank's inflation target of 3.0% but remaining within the tolerance range of 1.0 percentage points.

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