Bank of Korea Forecasts Consumer Prices to Rise Above 5% Until Q1 Next Year

[Image source=Yonhap News]

The Bank of Korea explained that the consumer price inflation rate will record a high increase in the 5% range until the first quarter of next year, and that there is significant uncertainty due to downward pressure on the economy, a high exchange rate, and international oil prices.

On the morning of the 2nd at 8:30 a.m., the Bank held a 'Price Situation Review Meeting' chaired by Deputy Governor Lee Seung-heon in the 15th-floor conference room of the main building to review the recent price situation and future price trends.

Regarding the 5.7% consumer price inflation rate in October, Deputy Governor Lee explained, "Although the increase in petroleum products continued to narrow, the rise in processed foods expanded, and due to increases in electricity and city gas prices, the rate remained significantly above 5% at a high level."

The consumer price inflation rate rose to the 6% range in June (6.0%) and July (6.3%), continuing a high-level trend, then slowed down in August (5.7%) and September (5.6%), but turned upward again in October.

In particular, core inflation has continued to rise, reaching 4.0% in August, 4.1% in September, and 4.2% in October, mainly driven by personal services and durable goods.

Deputy Governor Lee forecasted, "Consumer prices are expected to maintain a high increase in the 5% range until the first quarter of next year."

Personal service prices, which reflect demand-side inflationary pressures, are analyzed to continue rising in the 6% range for the time being.

Deputy Governor Lee added, "The future inflation outlook is highly uncertain as downward risks due to increased domestic and international economic downward pressure coexist with upward risks from sustained high exchange rates and expanded production cuts by major oil-producing countries."