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Korea Inflation July 2023

Korea: Inflation falls to over two-year low in July

Inflation dropped to 2.3% in July from June’s 2.7%. July’s reading represented the lowest inflation rate since March 2021. The moderation was led by falling energy prices.

Annual average inflation fell to 4.4% in July (June: 4.8%). Meanwhile, core inflation fell to 3.3% in July, from the previous month’s 3.5%.

Lastly, consumer prices rose 0.07% from the previous month in July, swinging from the 0.01% fall logged in June.

Inflation should remain near the Bank of Korea’s 2.0% target this year on average for two main reasons. Firstly, the surging energy prices seen in H2 2022 will create a high base effect. Second, consumers will likely reduce their spending ahead as a result of depleted savings and rising interest rates amid high debt. An upside risk is posed by sticky core inflation, which remained above headline inflation in July.

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