"Consumer Prices Show Clear Slowdown Until Mid-Year... Core Inflation Slows Down More Gradually"

Bank of Korea Holds Meeting to Review Inflation Situation

Last month, the consumer price inflation rate fell to the 3% range for the first time in 14 months, and the Bank of Korea forecasted that the consumer price inflation rate will show a clear slowing trend until the middle of this year. However, the core inflation rate is expected to continue a slower deceleration compared to the consumer price inflation rate for the time being.

On the morning of the 2nd at 8:30 a.m., the Bank of Korea held a "Price Situation Review Meeting" chaired by Deputy Governor Kim Woong on the 16th floor conference room of the main building to review the recent price situation and future price trends, announcing these views.

Deputy Governor Kim Woong explained, "The consumer price inflation rate in April continued its slowing trend as the base effect caused a significant decline in energy prices and processed food price inflation. However, the core inflation rate (excluding food and energy) maintained a rigid trend by holding steady at 4.0%, the same level as the previous month."

According to the April consumer price trend announced by Statistics Korea on the same day, the consumer price index last month was 110.80 (2020=100), up 3.7% compared to the same month last year. This is the first time since February last year (3.7%) that the inflation rate has slowed to the 3% range.

The April consumer price inflation rate slowed significantly due to the base effect, with petroleum prices falling sharply compared to the same month last year and agricultural product prices narrowing their rise, mainly in vegetables. However, the core inflation rate (excluding food and energy) maintained the previous month's level (4.0%) as the rise in prices of goods excluding durable goods narrowed and rent increases showed a mild slowing trend, but the inflation rate of personal services expanded.

Deputy Governor Kim said, "The consumer price inflation rate is expected to show a clear slowing trend until the middle of this year, but the upward trend exceeding the target level (2%) will continue throughout the year, and the core inflation rate will also continue a slower deceleration compared to the consumer price inflation rate for the time being. There is high uncertainty regarding the future inflation path, including trends in international oil prices, domestic and foreign economic conditions, and the extent and timing of public utility fee increases."