Korea Inflation


Inflation back in target range for first time in ten months

In October, consumer prices dropped 0.16% over the previous month, contrasting the 0.08% rise recorded in September and the 0.17% increase observed in October 2010. In addition, the result marked the first monthly drop since November last year. As a consequence, annual inflation dropped from 4.3% in September to 3.9% in October, which was below market analysts' expectations of inflation falling to 4.2%. As a result of the drop recorded in October, annual inflation fell inside the Central Bank's target range of 3.0% 1.0 percentage points for the first time in ten months. The core inflation index, which excludes more volatile items such as fresh food and energy, dropped 0.17% over the previous month, which contrasted the 0.17% increase observed in September and the flat reading recorded in October 2010. Consequently, annual core inflation inched down from 3.9% in September to 3.7% in October. The Central Bank expects inflation to end the year at 4.0% in 2011, before falling to 3.4% by the end of 2012.

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