Korea Inflation


Inflation inches down in May

In May, consumer prices remained flat over the previous month, mirroring the result recorded in April and broadly in line with the 0.09% increase observed in May 2010. Due to the subdued monthly reading, annual inflation stepped down to 4.1% in May, down from the 4.2% recorded in April. The reading slightly undershot market analysts' expectations that inflation would remain unchanged at 4.2%. With May's result, annual inflation remained above the Central Bank's target range of 3.0% 1.0 percentage points for the fifth consecutive month. Contrasting the developments in the headline figures, the core inflation index, which excludes more volatile items such as fresh food and energy, added 0.51% over the previous month, which was up from the 0.17% increase recorded in April. As a consequence, annual core inflation jumped from 3.2% in April to 3.5% May, the highest level since June 2009. The Central Bank expects inflation to end the year at 3.9% in 2011, before stepping down to 3.4% by the end of 2012.

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