Consumer Prices in South Korea Eased Taking Pressure off Bank of Korea

South Korean energy and food prices started declining from elevated levels in August. Consumer prices in South Korea rose 5.6% year-on-year in September 2022, easing slightly from last month’s 5.7% and below the consensus forecast of 5.7%. This could take some pressure off the Bank of Korea in their fight against inflation. South Korea’s Monetary Policy Board of the Bank of Korea were among the first central banks to begin its tightening cycle last year. Bank of Korea raised its base rate by 25 bps to 2.5% during its August meeting, as widely expected, the highest since mid-2019 as expected. BoK cited persistent inflationary pressures and high inflation expectations

Bank of Korea

BoK Governor Rhee Chang-Yong stated that inflation remained the bank’s priority but warned that it would need to be reviewed if growth weakened sharply.

The BOK has risen rates by 150 cumulative basis points since August 2021. This was the biggest increase since the central bank adopted interest rates as its primary policy tool in 1999. With consumer inflation at 6 per cent in June, the highest level since 1998 the Bank is in one of the most forceful tightening campaigns ever.

South Korea Inflation September 2022

  • Consumer prices in South Korea rose 5.6% year-on-year in September 2022
  • Prior was 5.7% in August and consensus forecast 5.7
  • Energy and food prices started declining from elevated levels.
  • Food prices fell to 7.8% from 8.0% in August
  • Service sectors like education (1.6% vs 1.5%) and restaurants and hotels (8.8% vs 8.7%) gained as wages rose.
South Korea Inflation Rate

The Bank of Korea has risen rates from a record low of 0.5 percent amid uncertainty over the global inflation rate explosion.

South Korea Interest Rate

Source: Bank of Korea, Reuters

From The TradersCommunity News Desk