Korea Inflation


Inflation rises to seven-month high in March

Consumer prices added 0.18% over the previous month in March, which was below the 0.27% increase observed in February. The result represents the fourth consecutive increase in consumer prices. Higher prices for food and non-alcoholic beverages, as well as for education and miscellaneous goods were the main contributors to the monthly increase.

Annual headline inflation rose from 1.0% in February to 1.3% in March, which was a tad lower than the 1.4% rate the market had expected. The reading represents the highest level since August 2013. The annual reading is still below the Central Bank's target range of between 2.0% and 4.0%. In March, annual average inflation stabilized at February's 1.2%.

Meanwhile, core consumer prices, which exclude more volatile items such as fresh food and energy, rose 0.29% over the previous month, which was up from the 0.22% increase recorded in February. Annual core inflation climbed from 1.7% in February to 2.1% in March.

The Central Bank expects annual average inflation to be 2.3% in 2014, before rising to 2.8% in 2015. FocusEconomics Consensus Forecast panelists expect inflation to average 2.3% in 2014, which is down 0.1 percentage points from last month's forecast. According to the panel, average inflation should reach 2.8% in 2015.

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Korea Inflation Chart

Korea Inflation March 2014

Note: Month-on-month and year-on-year variation of consumer price index in %.
Source: KOSTAT-KOSIS and FocusEconomics calculations.

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