Korea Inflation


Korea: Inflation eases in August

August 29, 2014

In August, consumer prices added 0.17% over the previous month, which was above the 0.15% increase observed in July. The monthly increase reflected higher prices for alcoholic beverages and tobacco, as well as for housing, water, electricity, gas and other fuels. Conversely, the indices for health and transport fell in August.

Annual headline inflation slowed slightly from 1.6% in July to 1.4% in August, which was just below the 1.6% the market had expected. The annual reading is now further below the Central Bank’s target range of inflation between 2.5% and 3.5%. Meanwhile, annual average inflation held steady in August at the 1.3% that was recorded in both June and July.

Core consumer prices, which exclude fresh food and energy prices, rose 0.07% over the previous month and came in below the 0.20% increase registered in July. In addition, annual core inflation inched up from 2.2% in July to 2.4% in August, which marked the highest rate since February 2012.

The Central Bank sees annual average inflation of 2.1% in 2014, and expect it to rise to 2.8% in 2015. FocusEconomics Consensus Forecast panelists expect inflation to average 1.8% in 2014, which is down 0.1 percentage points from last month’s forecast. In 2015, the panel expects average inflation to reach 2.5%

Author: Angela Bouzanis, Senior Economist

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