Bank of Korea: "Consumer Price Inflation Rate Slows from This Month... Forecast Around 3% by Year-End"

Bank of Korea Holds Price Situation Review Meeting
September Inflation Rate 3.7% Year-on-Year... Driven by Petroleum Products and Agricultural Goods

The Bank of Korea forecasted that the consumer price inflation rate is expected to continue slowing down from October and will likely be around 3% by the end of the year.

On the 5th, the Bank of Korea held a 'Price Situation Review Meeting' chaired by Deputy Governor Kim Woong to assess the recent price situation and future price trends. The inflation rate announced for September was 3.7%, marking the highest level in five months since April.

At the meeting, Deputy Governor Kim Woong explained, "The consumer price inflation rate in September rose somewhat above the August forecast path due to the base effect partially working and the continued increase in oil and agricultural product prices from the previous month." The inflation rate, which was 2.3% year-on-year in July, gradually increased to 3.4% in August and 3.7% in September.

Prices of petroleum products and agricultural products led the upward trend in inflation. The petroleum product prices saw a base effect from last year's decline, and with recent international oil prices exceeding $90, the year-on-year decline narrowed significantly. Agricultural product prices, especially fruits, saw a substantial increase.

However, the core inflation rate, excluding food and energy, remained at the low to mid-3% range. It has stayed at 3.3% for three consecutive months from July to September.

The Bank of Korea explained, "While product prices show a rigid trend due to continued cost pressures and the increase in public service prices has expanded, personal service prices continue to show a slowing trend."

Nevertheless, it added, "There remains high uncertainty regarding the future inflation forecast path, related to trends in international oil prices, exchange rates, and domestic and international economic conditions."