South Korea’s consumer price inflation hovered below 3 percent for the fifth consecutive month, rising 2 percent in August from a year earlier after gaining 2.6 percent in July, according to Statistics Korea. Slower price growth in farm goods and oil products significantly contributed to the decline in inflation this month.
Month-on-month, South Korea’s consumer price inflation was up 0.4 percent, the fastest in six months, after rising 0.3 percent in July.
August marked the lowest increase in inflation in 3.5 years since March 2021, but headline inflation continued to surpass the Bank of Korea (BOK)’s mid-term inflation target of 2 percent.
Core inflation slows
South Korea’s core inflation, which excludes volatile food and energy items, rose 2.1 percent annually, slowing from the previous month’s 2.2 percent rise and marking the weakest since November 2021.
Prices of agricultural, livestock and fishery products rose 2.4 percent year-on-year in August, lower than a rise of 5.5 percent in July. Agricultural product prices gained 3.6 percent last month, lifting overall inflation in South Korea by 0.15 percentage points.
Meanwhile, oil products prices rose only 0.1 percent in August from a year earlier, sharply lower than the 8.4 percent rise in July. In addition, gasoline and diesel prices fell 0.7 percent and 1.9 percent, respectively. However, liquefied petroleum gas prices picked up. Besides, housing rent inched up 0.4 percent in August from a year earlier.
Read | Japan’s manufacturing sector signals recovery in August as output returns to expansion: PMI
Rate cut prospects
Last month, the Bank of Korea held interest rates steady at their highest in nearly 16 years. However, it revived expectations for a policy easing that some economists see happening as soon as October as growth concerns in South Korea overshadow inflation concerns. The central bank said that the data revealed that inflation was stabilizing more quickly than in other major economies and it expected prices to maintain a stable trend.
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