November Consumer Prices Up 3.34% Year-on-Year
Inflation Slows for Three Consecutive Months
Bank of Korea Outlook
Lee Chang-yong, Governor of the Bank of Korea, is holding a press conference after the Monetary Policy Committee meeting on monetary policy direction held at the Bank of Korea in Jung-gu, Seoul on the 30th. Photo by Joint Press Corps
Ebest Investment & Securities analyzed on the 7th that it is still insufficient to completely let down the guard against domestic inflation, and that the current policy of maintaining interest rates is likely to continue.
Woo Hye-young, a researcher at Ebest Investment & Securities, stated, "The Bank of Korea forecasts inflation to be in the low 3% range by the end of this year and around 3% in the first half of next year," adding, "There are upside risks to inflation."
The consumer price inflation rate for November, announced by Statistics Korea the previous day, was recorded at 3.34% compared to the same month last year. This is a decrease of 0.47 percentage points from October (3.81%), marking a slowdown for three consecutive months. However, it remains higher than the Bank of Korea's inflation stabilization target of 2%.
This year's consumer price inflation rate dropped to the 2% range in June (2.7%) and July (2.3%), but then increased again in August (3.4%), September (3.7%), and October (3.8%). The rebound of the headline inflation rate to the high 3% range in October was mainly attributed to rising agricultural product prices and international oil prices.
In November, agricultural product prices surged by 13.63% compared to the same month last year. This was due to the base effect of low vegetable prices in November last year. Compared to the previous month, prices fell by 7.57% as shipment volumes increased due to weather conditions. Petroleum prices fell by 5.07% year-on-year and dropped 3.52% compared to the previous month, as international oil prices continued to decline since the end of September.
Researcher Woo commented, "The Monetary Policy Board in November slightly raised the inflation forecast reflecting temporarily elevated prices, but did not significantly revise the forecast trajectory," and evaluated, "This inflation data supported the Bank of Korea's inflation outlook at the November Monetary Policy Board meeting."
Regarding core inflation rates, the index excluding agricultural products and petroleum slowed from 3.64% to 3.31%. The index excluding food and energy decreased from 3.22% to 2.97%. Researcher Woo diagnosed, "The continued slowdown in core inflation is positive, but it is still insufficient to completely let down the guard against inflation," adding, "Bank of Korea Governor Lee Chang-yong also mentioned that the timing of inflation decline was delayed by one month compared to the initial forecast, and that there is no fundamental change in policy."
He continued, "The Bank of Korea maintains the stance that micro-level measures should be taken proactively regarding household debt, so while the possibility of additional rate hikes is not high, a decision to at least maintain the current rate is still necessary."
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