Korea: Inflation steps up in July
August 1, 2013
In July, consumer prices rose 0.2% over the previous month, which contrasted the 0.1% drop recorded in June. The reading mainly reflected a fall in prices for food and non-alcoholic beverages.
As a result, annual inflation grew from 1.0% in June to 1.4% in July, matching market expectations. Despite the increase, inflation still 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, matching the increase seen in June. As a result, annual core inflation stepped up from 1.4% in June to 1.5% in July.
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.