Korea skyline

Korea Inflation August 2023

Korea: Inflation exceeds expectations in August

Inflation rose to 3.4% in August, which was up from July’s 2.3%. The print exceeded market expectations of a 2.9% rise and will likely push the Bank of Korea to keep interest rates steady for the rest of the year. The acceleration was due to a bigger rise in food prices and a smaller decline in transport prices.

Annual average inflation edged down to 4.2% in August (July: 4.4%). Meanwhile, core inflation was stable, coming in at July’s 3.3% in August.

Lastly, consumer prices rose 1.02% from the previous month in August, picking up from July’s 0.07% increase. August’s figure was the sharpest increase in prices since January 2017.

Our panelists expect inflation to decline on average through to December from current levels but remain above the Bank of Korea’s 2.0% target due to sticky core inflation and the recent rise in oil prices. This means the Bank of Korea is likely to keep its policy rate for the rest of the year at 3.50%, which the BOK’s Governor says he considers “restrictive”—a level that will likely dampen economic activity.

Goldman Sachs’ Irene Choi and Goohoon Kwon said:

“In light of the upside surprise in the August report, we are revising up our full-year 2023 and 2024 inflation forecasts by 20bp and 10bp respectively, to 3.4% and 2.5%.”

Nomura’s Jeong Woo Park commented:

“With a weaker KRW [Korean won], and as we expect higher prices for oil and agricultural products to increase near-term price pressures over the next couple of months before inflation slows to below 3% by year-end, we raise our 2023 inflation forecast to 3.4% from 2.9%.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest