Korea: Inflation inches down in December
December 31, 2013
Consumer prices rose 0.12% over the previous month in December, which contrasted the 0.02% decrease observed in November. The result represents the first increase in consumer prices after two consecutive months of decline and mainly reflects higher prices for food and non-alcoholic beverages, cultural activities, and transport and recreation.
Annual inflation inched down from 1.2% in November to 1.1% in December, which fell short of market expectations of 1.2% inflation. The annual reading remains well below the Central Bank's target range of 3.0% plus/minus 0.5 percentage points. In the full year 2013, inflation moderated to 1.3%, which was down from the 2.2% registered in 2012.
Meanwhile, core consumer prices, which exclude more volatile items such as fresh food and energy, added 0.12% over the previous month (November: +0.22%). Annual core inched down from 2.0% in November to 1.9% in December.
The Central Bank sees annual average inflation at 2.5% in 2014. FocusEconomics Consensus Forecast panelists expect inflation to average 2.3% in 2014, which is down 0.1 percentage points from last month's forecast. According to the panel, average inflation should reach 2.8% in 2015.
Author: Ricardo Aceves, Senior Economist