Korea Inflation October 2016


Korea: Inflation rises to eight-month high in October

November 1, 2016

After jumping 0.6% from the previous month in September, consumer prices moderated and rose only 0.1% month-on-month in October. The result contrasted the 0.1% drop the markets had expected and mainly reflected that higher prices for alcoholic beverages and tobacco more than offset a sharp decline in prices of food and non-alcoholic beverages.

Inflation rose from 1.2% in September to 1.3% in October, which represented the highest level since February. Annual average inflation inched up to 1.0% in October from 0.9% in September. Inflation continues to hover below the Central Bank’s target range of 2.5%–3.5%. Persistent weak inflationary pressures had caused the Bank of Korea to consistently miss its inflation target from 2013 to 2015, so in December 2015 the Central Bank set a lower target band of 2.5%–3.5% for the period between 2016 and 2018.

Core consumer prices, which exclude fresh food and energy prices, jumped 0.5% from the previous month in October, which was well above the 0.1% increase in September. Core inflation rose from 1.3% in September to 1.5% in October.

The Bank of Korea expects inflation to average 1.0% in 2016 and 1.9% in 2017. FocusEconomics Consensus Forecast panelists expect inflation to average 0.9% in 2016, which is down 0.1 percentage points from last month’s forecast. In 2017, the panel expects inflation to average 1.5%, which is unchanged from last month’s forecast.

Author:, Senior Economist

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Korea Inflation Chart

Korea Inflation October 2016

Note: Month-on-month and year-on-year changes of consumer price index in %.
Source: National Statistics Office of Korea (KOSTAT)

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