October Inflation Rate Slows to 1.3%, Bank of Korea Says "Foundation for Price Stability Strengthened"

Clear Price Stability Trend, Expected to Stabilize Around 2% Going Forward

On the 23rd of last month, cabbages from the production area were being unloaded at the vegetable collection center in Garak Wholesale Market, Songpa-gu, Seoul. Photo by Jo Yongjun

Last month, the inflation rate significantly slowed to 1.3%, and the Bank of Korea assessed that the foundation for price stability is becoming more solid.

On the morning of the 5th, the Bank of Korea announced that it held a price situation review meeting at its headquarters in Jung-gu, Seoul, chaired by Deputy Governor Kim Woong.

According to Statistics Korea and the Bank of Korea, the consumer price inflation rate in October fell to 1.3%, largely due to a sharp slowdown in petroleum product prices influenced by the decline in international oil prices.

Agricultural product prices also acted as a downward pressure on inflation, as some vegetable prices such as cabbage rose, but fruit prices fell, and the base effect from last year also played a role.

The Bank of Korea evaluated that the consumer price inflation rate slowed to the low to mid-1% range, and the core inflation rate slowed to the high 1% range, indicating a process of strengthening the foundation for price stability.

However, it noted that the base effect from the unusually high inflation during the same period last year also partially contributed, and there is a possibility that the inflation rate may rise somewhat in the future.

Deputy Governor Kim Woong explained, "The lower inflation rate last month was largely due to the slowdown in petroleum and agricultural product prices and the base effect from last year, with some contribution from the core inflation slowdown caused by low demand pressure."

He added, "Going forward, due to the base effect from the oil price decline at the end of last year and the reduction in the fuel tax cut rate, the inflation rate may rise somewhat. The future inflation path is expected to see core inflation stabilize around 2%, while consumer prices will approach 2% toward the end of the year."