Inflation in South Korea Continues to Slip Below 2% Target

Forex - Inflation in South Korea increased at a slower pace than expected in November, remaining significantly below the South Korean central bank's annual target of 2%. According to the release by the South Korean Statistical Office, consumer prices rose by 1.5% compared to the previous year, following a 1.3% increase in October. The upward movement in prices was anticipated due to the beginning of a base effect decline in the country. Analysts had projected that the rate of increase could rise to 1.7%.

When compared to the previous month, consumer prices decreased by 0.3% in the same month, indicating a faster decline than the market's expectation of a 0.1% drop. Excluding volatile food and energy prices, core consumer prices increased by 1.9% year-on-year in November, remaining unchanged from the previous month.

The South Korean central bank stated in its latest policy meeting in November that while inflation is likely to continue cooling, its future path will generally be influenced by volatile exchange rates, global oil prices, and local utility price adjustments. In November, the central bank revised its inflation forecast downward and, in a rare move, implemented consecutive rate cuts to support the slowing economy. The bank now expects inflation to average 2.3% in 2024 and 1.9% in 2025, weaker than previous forecasts of 2.5% and 2.1%, respectively.