Korea: Inflation comes in above BoK’s 2% target in April
Consumer prices increased 0.21% in April over the previous month, picking up from the 0.15% rise recorded in March. Looking at the details of the release, food and non-alcoholic beverages prices fell at a more moderate pace in April compared to the previous month, while price pressures for restaurants and hotels increased. Notably, prices for recreation and culture rebounded.
Inflation came in at 2.3% in April, which was up from March’s 1.5% and above the Bok’s 2.0% target, mainly due to a favorable base effect. April’s result marked the highest inflation rate since August 2017. Annual average inflation edged up to 0.7% in April (March: 0.5% yoy). Core inflation rose to 1.4% in April from March’s 1.0% increase.
On the outlook, Jeong Woo Park, economist at Nomura, commented:
“Overall, despite the jump in headline inflation, underlying trends suggest inflation will remain well anchored below the BOK’s 2.0% inflation target. Looking ahead, base effects should fade in May, return to their normal fluctuations and not have any substantial impact on underlying inflation trends. That said, given last year’s plunge in inflation, we expect CPI inflation to stay over 2.0% in Q2 before falling below 2.0% in H2.”