Korea Inflation


Inflation moderates in April

In April, consumer prices remained flat over the previous month, which was down from the 0.50% price increase recorded in March and the 0.52% increase observed in April 2010. As a result of the monthly price increase, annual inflation stepped down to 4.2% in April, after the 4.7% increase in March which represented the highest level since October 2008. The reading undershot market analysts' expectation of inflation inching down to 4.6%. With April's result, inflation moved closer to the Central Bank's target range of 3.0%1.0 percentage points. Nonetheless, the annual reading represented the fourth consecutive month where inflation sits above the target range. That said, the core inflation index, which excludes more volatile items such as fresh food and energy, added 0.17% over the previous month, which was down from the 0.26% increase recorded in March. As a consequence, annual core inflation inched down from 3.3% in March to 3.2% in April. 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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