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.
Author: Ricardo Aceves, Senior Economist