Korea: Inflation drops in November
December 1, 2010
In November, consumer prices dropped 0.59% over the previous month, contrasting the 0.17% increase recorded in October and marking the first monthly contraction since June this year. The main drivers behind the monthly price decrease included a fall in the price of food and non-alcoholic beverages, down 4.01%compared to the previous month, and a 0.51% fall in the price of clothing and footwear. As a result of the price drop, annual inflation declined to 3.3%, down from the 4.1% increase recorded in October, which had marked a 20-month high. The annual result undershot market expectations that inflation would ease to 3.7%. The core inflation index, which excludes more volatile items such as fresh food and energy, remained virtually unchanged over the previous month, adding a meagre 0.09% over October. Nevertheless, annual core inflation inched down from October's1.9% to 1.8%. The moving three-year average inflation rate, which is the basis of the Central Bank's monetary policy, remained unchanged at October's 3.5%, thus exceeding the Central Bank's inflation target of 3.0% but remaining within the tolerance range of 1.0 percentage points.
Author: Armando Ciccarelli, Head of Data Solutions