Korea Inflation April 2016


Korea: Inflation stabilizes in April

May 2, 2016

In April, consumer prices rose 0.1% over the previous month, which contrasted the 0.3% drop observed in March. The statistical office reported that higher prices for food and non-alcoholic beverages, transportation, as well as recreation and culture were the main drivers behind the monthly increase. Conversely, prices for furniture and health services fell over the previous month.

Inflation in April stabilized at March’s 1.0%. Due to April’s subdued print, inflation continues to hover well below the Central Bank’s target range of 2.5%–3.5%. Persistent weak inflationary pressures have caused the Bank of Korea to miss its inflation target consistently in the past three years. As a result, in December 2015, the Central Bank set a lower target band of 2.5%–3.5% for the period between 2016 and 2018. Meanwhile, annual average inflation inched up from 0.8% in March to 0.9% in April.

Core consumer prices, which exclude fresh food and energy prices, gained 0.1% April compared to the previous month, which came in below March’s flat print. Core inflation inched up from 1.7% in March to 1.8% in April.

In April, the Bank of Korea cut its inflation forecast and does not expect it to average 1.2% (previous estimate: 1.45%) in 2016. For 2017, the Bank sees inflation averaging 2.0%. FocusEconomics Consensus Forecast panelists expect inflation to average 1.4% in 2016, which is unchanged from last month’s forecast. In 2017, the panel expects average inflation to reach 1.9%.

Author:, Senior Economist

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Korea Inflation Chart

Korea Inflation April 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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