Bank of Korea: "November inflation fell as expected... but maintaining rapid slowdown remains difficult"

On the 14th of last month, Mangwon Market in Mapo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

The Bank of Korea explained that while the consumer price inflation rate in November slowed significantly as expected, it will be difficult for such a rapid deceleration trend to continue going forward.

On the morning of the 5th, the Bank of Korea held a 'Price Situation Review Meeting' chaired by Deputy Governor Kim Woong on the 16th floor conference room of the Bank of Korea headquarters in Jung-gu, Seoul, to review the recent price situation and future price trends.

On that day, Statistics Korea announced that the consumer price index in November rose by 3.3% compared to the same month last year. The inflation rate slowed from the previous month (3.8%) as international oil prices and agricultural product prices, which had driven inflation from August to October, declined.

Deputy Governor Kim said, "The consumer price inflation rate in November slowed significantly as expected due to the decline in oil prices and agricultural product prices that had risen sharply in the short term," but added, "It seems difficult for such a rapid deceleration trend to continue going forward."

He added, "Looking ahead, if 'oil prices do not rise sharply again,' the inflation rate is expected to continue slowing as demand-side pressures weaken and the impact of supply shocks gradually diminishes, but the pace is expected to be moderate."

Deputy Governor Kim said that factors increasing uncertainty in the inflation outlook include trends in international oil prices, domestic and foreign economic conditions, and the impact of accumulated cost pressures.

According to the Bank of Korea, the November consumer price inflation rate was 0.5 percentage points lower than the previous month due to downward factors such as petroleum products (-0.2 percentage points), agricultural, livestock, and fishery products (-0.1 percentage points), and core goods (-0.2 percentage points).

Petroleum prices fell further as the possibility of escalation in the war between Israel and Hamas decreased and concerns about global demand slowdown led international oil prices to recently drop to around $80 per barrel.

Prices of agricultural, livestock, and fishery products, which had fueled inflation concerns, also saw a reduced increase as agricultural product prices stabilized from late October and livestock prices, centered on pork, declined.

Regarding core inflation, the inflation rate of goods, mainly textiles and durable goods, also significantly decreased, showing a slowing trend.

However, expected inflation remained high in October (3.4%) and November (3.4%) following a rebound in consumer price inflation from August to October, continuing the high level seen in September (3.3%).