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Korea Inflation March 2023

Korea: Inflation declines to lowest level in one year in March

Inflation dropped to 4.2% in March, below February’s 4.8%. March’s reading marked the weakest inflation rate since March 2022 and was slightly below market expectations of 4.3%. The cooling of price pressures was primarily due to falling prices for fuel.

The trend was unchanged, with annual average inflation coming in at February’s 5.3% in March. Meanwhile, core inflation was steady, coming in at February’s 4.0% in March.

Lastly, consumer prices increased 0.16% over the previous month in March, following February’s 0.25% rise.

The lower-than-expected inflation figure in March came as fuel price inflation remained negative for the second consecutive month. Fuel price pressures are expected to remain mild ahead. Along with a tougher base effect and weaker consumer demand, this means our panelists expect inflation to fall close to the Bank of Korea’s 2.0% target by Q1 2024. That said, OPEC+’s decision to reduce oil output from May onwards poses an upside risk.

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