Korea: Inflation inches down in March
April 1, 2013
In March, consumer prices dropped 0.2% over the previous month, which contrasted the 0.3% increase recorded in February. The fall was mainly due to lower prices for food and non-alcoholic beverages as well as for education.
Annual inflation inched down from 1.4% in February to 1.3% in March, defying market expectations that had inflation rising to 1.8%. As a result, inflation moved further below the Central Bank's target range of 3.0% plus/minus 0.5 percentage points providing the Bank of Korea with more scope to cut interest rates going forward.
The core inflation index, which excludes more volatile items such as fresh food and energy, dropped 0.2% over the previous month, contrasting the 0.2% increase observed in February. Annual core inflation rose from 1.3% in February to 1.5% in March.
The Central Bank sees annual average inflation at 2.5% this year. For 2014, the Bank expects inflation to average 2.8%. FocusEconomics Consensus Forecast panellists expect inflation to average 2.6% in 2013, which is unchanged from last month's forecast. According to the panel, average inflation will reach 3.0% in 2014.