Korea: Inflation stable in June
July 1, 2013
In June, consumer prices dropped 0.1% over the previous month, which followed the flat reading recorded in May. The reading mainly reflected a fall in prices for food and non-alcoholic beverages.
Despite the monthly fall, annual inflation was stable at May's 1.0%, which came in below market expectations of a 1.1% increase. As a result, inflation remains well below the Central Bank's target range of 3.0% plus/minus 0.5 percentage points, providing the Bank of Korea with ample scope to cut interest rates going forward.
The core inflation index, which excludes more volatile items such as fresh food and energy, rose 0.1% over the previous month, below the 0.4% rise seen in May. As a result, annual core inflation fell to 1.4% in June from 1.6% in May.
The Central Bank sees annual average inflation at 2.3% this year. For 2014, the Bank expects inflation to average 2.8%. FocusEconomics Consensus Forecast panellists expect inflation to average 2.6% in 2013, which is unchanged from last month's forecast. According to the panel, average inflation will reach 3.0% in 2014.