Korea: Price pressures perk up slightly in November
Consumer prices decreased 0.6% over the prior month in November, contrasting October’s 0.2% increase. Lower prices for food and non-alcoholic beverages, recreation and culture, and transport were chiefly behind November’s decline.
Year-on-year consumer prices ticked up 0.2% in November, following October’s flat reading, but remained well below the Bank of Korea’s 2.0% target rate. Core inflation—which excludes fresh food and energy prices—edged down to 0.6% in November from 0.8% in October. Annual average inflation also inched down to 0.4% in November from 0.6% the month prior.
Looking ahead, inflationary pressures are expected to intensify next year as lower interest rates—particularly ultra-low mortgage rates—support household spending and credit demand. Moreover, strong government spending should also support wage growth and job creation, further fueling inflation. That being said, relatively tepid economic growth, elevated household debt and a subdued housing market will likely keep prices pressures comfortably below the Bank of Korea’s 2.0% target rate.