Korea: Inflation inches down in August
September 2, 2013
In August, consumer prices rose 0.3% over the previous month, which was up from the 0.2% increase recorded in July. Higher prices for food and non-alcoholic beverages as well as for recreation and culture were the main drivers behind the monthly increase.
Annual inflation slowed from 1.4% in July to 1.3% in August, which was below market expectations of 1.5%. Inflation still remains well below the Central Bank's target range of 3.0% plus/minus 0.5 percentage points, providing the Bank of Korea with ample scope to cut interest rates going forward.
The core inflation index, which excludes more volatile items such as fresh food and energy, was unchanged over the previous month (July: +0.1% month-on-month). Meanwhile, annual core inflation slowed from 1.5% in July to 1.3% in August.
The Central Bank sees annual average inflation at 1.7% this year. For 2014, the Bank expects inflation to average 2.9%. FocusEconomics Consensus Forecast panelists expect inflation to average 2.6% in 2013, which is unchanged from last month's forecast. According to the panel, average inflation should reach 3.0% in 2014.
Author: Armando Ciccarelli, Head of Data Solutions