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.
Author: Ricardo Aceves, Senior Economist