Korea: Inflation inches up in April
Consumer prices rose 0.4% in month-on-month terms in April, contrasting the 0.2% fall registered in March. The increase was largely due to a sharp rise in transport costs and higher prices for food and non-alcoholic beverages, and recreation and culture.
Inflation ticked up to 0.6% in April from March’s over two-and-a-half-year low of 0.4%, defying market expectations of a steady reading. Nevertheless, inflation remains well below the Bank of Korea’s 2.0% target. Core inflation, which excludes fresh food and energy prices, edged up to 0.9% in April from 0.8% in March. Meanwhile, annual average was stable at 1.3%.
Inflationary pressures are expected to pick up only modestly in the quarters ahead, supported by the expiration of a temporary fuel tax cut and a gradual rise in global oil prices. Nevertheless, lower housing rental prices, sluggish economic momentum and soft employment growth will likely put downward pressure on prices.