Korea: Inflation exceeds Central Bank's tolerance margin in January
February 1, 2011
In January, consumer prices rose 0.93% over the previous month, up from the 0.60% price increase recorded in December. The monthly rise was driven by higher prices for food and alcoholic beverages (+2.42% month-on-month) and transport (+1.97% mom). As a result of the pronounced price increase, annual inflation jumped from 3.5% in December to 4.1%, coming in above the 3.8% anticipated by market analysts. At the current level, inflation is above the Central Bank's target of 3.0% and is even slightly surpassing the tolerance range of 1.0 percentage points. The core inflation index, which excludes more volatile items such as fresh food and energy, added 0.61% over December, pushing annual core inflation from 2.0% in December to 2.6% in January. The Central Bank expects inflation to end the year at 3.5% in 2011, before stepping down to 3.2% by the end of 2012.
Author: Armando Ciccarelli, Head of Data Solutions