Inflation in Korea
Korea - Inflation (end of period)
Inflation hits more-than-decade high in March
Consumer prices increased 0.72% in March over the previous month, accelerating from the 0.58% rise seen in February. March's figure was the highest reading since September 2018. Looking at the details of the release, higher oil prices were largely behind the higher reading, with transport prices accelerating in March. Prices for housing and utilities increased at a softer rate, largely due to government measures to protect households from the effect of higher energy prices on the cost of living.
Inflation came in at 4.1% in March, which was up from February’s 3.7%. March's result represented the highest inflation rate since December 2011. Annual average inflation edged up to 3.1% in March (February: 2.9%). Finally, core inflation ticked up to 3.3% in March, from the previous month's 3.2%.
Analysts at Nomura see inflation as persistent this year:
“Following the release of March inflation data, we expect headline inflation to remain elevated and above the BOK’s 2.0% target throughout 2022, as some areas of inflation are likely to prove more persistent due to the second-round effects of cost-push inflation. As a result, we raise our inflation forecasts to 3.6% year-on-year for 2022 (BOK: 3.1%), substantially up from our previous estimate of 2.9%, and to 1.7% for 2023 (1.3% previously), reflecting a more persistent rise in primary drivers such as oil and dining out prices.”
Analysts at ING note new government measures to shield households from the rising cost of living:
“With growing concerns over higher inflation, the government has decided to expand its temporary fuel tax cut to 30.0% (vs 20.0% currently). This will apply from May to July. It has halted additional electricity rate hikes for the second quarter of 2022. The government’s measures could relieve some pressures at best, but CPI is expected to hover around 4% in the second quarter of this year. As underlying pipeline pressures increases, we expect it soon to be passed on to domestic prices—not only in commodity prices but also in services prices.”
Our panel forecasts inflation to average 3.0% in 2022, which is up 0.6 percentage points from last month’s forecast. In 2023, inflation is seen averaging 1.8%.
Korea - Inflation (eop) Data
|Inflation Rate (CPI, annual variation in %, eop)||1.1||1.3||1.4||1.3||0.7|
5 years of economic forecasts for more than 30 economic indicators.
Korea Inflation (eop) Chart
Source: Korea National Statistics Office and FocusEconomics calculations.
|Bond Yield||1.68||1.55 %||Dec 31|
|Exchange Rate||1,156||0.21 %||Dec 31|
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April 14, 2022
At its meeting on 14 April, the Bank of Korea (BOK) raised the base rate by 25 basis points to 1.50%.
April 5, 2022
Consumer prices increased 0.72% in March over the previous month, accelerating from the 0.58% rise seen in February.
April 1, 2022
The S&P Global Manufacturing Purchasing Managers' Index (PMI) came in at 51.2 in March, down from February's 53.8.
April 1, 2022
Merchandise exports jumped 18.2% in annual terms in March (February: +20.7% year-on-year).
March 31, 2022
Industrial output rose 3.9% compared to the same month a year earlier in February in seasonally-adjusted terms, which followed January's 6.6% increase.