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Korea Inflation January 2023

Korea: Inflation increases in January

Inflation came in at 5.2% in January, which was up from December’s 5.0% and exceeded the market consensus of 4.9%. January’s result represented the highest inflation rate since October 2022. The reading was driven by rising prices for housing and utilities and food and non-alcoholic beverages.

Annual average inflation ticked up to 5.2% in January (December: 5.1%). Meanwhile, core inflation was unchanged, coming in at December’s 4.1% in January.

Finally, consumer prices rose 0.75% from the previous month in January, picking up from December’s 0.16% increase. January’s figure marked the highest reading since September 2018.

Inflation increased in January largely as a result of one-off factors. Electricity prices rose at a much steeper rate in January than in December as a result of price hikes by utility firms. Agricultural prices also rose at a faster rate in January than they did in December as a result of robust demand during the Lunar New Year and disruptions to supply stemming from cold weather.

Looking ahead, inflation is expected to fall close to the Bank of Korea’s 2.0% target by the end of the year due to falling rent prices and weakening domestic demand.

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