Korea Inflation September 2016


Inflation shoots up in September

In September, consumer prices rose 0.6% over the previous month, which contrasted the 0.1% decrease in August and overshot the 0.2% increase the markets had expected. The National Statistics Office of Korea (KOSTAT) reported that higher prices for housing, utilities, healthcare and transport were the main drivers behind the monthly increase.

Inflation jumped from 0.4% in August to 1.2% in September, which marked a seventh-month high. Annual average inflation in September held at 0.9% for the sixth consecutive month. Inflation continues to hover below the Central Bank’s target range of 2.5%–3.5%. Persistent weak inflationary pressures had caused the Bank of Korea to consistently miss its inflation target for t from 2013 to 2015, so in December 2015 the Central Bank set a lower target band of 2.5%–3.5% for the period between 2016 and 2018.

Core consumer prices, which exclude fresh food and energy prices, increased 0.1% over the previous month in September, which contrasted the 0.3% decrease in August. Core inflation rose from 1.1% in August to 1.3% in September.

The Bank of Korea expects inflation to average 1.1% in 2016. For 2017, the Bank sees inflation averaging 1.9%. FocusEconomics Consensus Forecast panelists expect inflation to average 1.1% in 2016, which is unchanged from last month’s forecast. In 2017, the panel expects inflation to average 1.6%.

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Korea Inflation Chart

Korea Inflation September 2016

Note: Month-on-month and year-on-year changes of consumer price index in %.
Source: National Statistics Office of Korea (KOSTAT)

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