Korea Inflation June 2016


Korea: Inflation stabilizes in June

July 1, 2016

In June, consumer prices were unchanged over the previous month, which came in below the 0.1% increase registered in May. The National Statistics Office of Korea (KOSTAT) reported that lower prices for food and non-alcoholic beverages, alcoholic beverages, as well as recreation and culture were the main drivers behind the subdued print.

Inflation was 0.8% in June, which mirrored May’s reading. The 12-month average of the annual variation in inflation was 0.9% in June (May: 0.9%). 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.

Core consumer prices, which exclude fresh food and energy prices, rose 0.1% over the previous month in June, which came in below May’s 0.2% increase. Core inflation inched up from 1.6% in May to 1.7% in June.

The Bank of Korea expects inflation to average 1.2% this year. 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 June 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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