Inflation in South Korea Remains Below the 2% Target

Forex - Inflation in South Korea increased at a slower rate than expected in November, remaining significantly below the central bank's annual target of 2%. According to the South Korean Statistics Office, consumer prices rose 1.5% year-on-year after a 1.3% increase in October. The upward movement in price increases was anticipated due to a diminishing base effect in the country. Analysts had predicted that the rate of increase could rise to 1.7%.

Compared to the previous month, consumer prices fell by 0.3% in the same month, indicating a faster decline than the market's forecast of a 0.1% drop.

Core consumer prices, which exclude volatile food and energy costs, rose by 1.9% year-on-year in November and remained unchanged from the previous month.

The Bank of Korea stated in its recent policy meeting in November that it is likely inflation will continue to cool but that its future trajectory will generally be influenced by volatile exchange rates, global oil prices, and local utility price adjustments.

In November, the bank lowered its inflation forecast and made an unusual consecutive interest rate cut to support the declining economy. The bank now expects inflation to average 2.3% in 2024 and 1.9% in 2025, weaker than its previous forecasts of 2.5% and 2.1%, respectively.