Base Effects of Petroleum and Agricultural Product Prices, Low Demand Pressure
Inflation Expected to Slow Down for a While... Stabilization Around 2% Projected
The Bank of Korea stated on the 5th that last month's consumer price inflation rate recorded 2.2%, explaining that "the increase was driven by a significant rise in petroleum product prices due to exchange rate and oil price increases," and assessed that "there is considerable uncertainty related to the movements of exchange rates and oil prices, domestic demand trends, and agricultural product prices."
Kim Woong, Deputy Governor of the Bank of Korea, said at the morning price situation review meeting, "We will provide a revised forecast considering the comprehensive impact of these factors during the February economic outlook." The Bank of Korea lowered its 2024 consumer price inflation forecast from 2.5% to 2.3% on November 28 last year. The forecast for this year was also reduced from 2.1% to 1.9%.
Deputy Governor Kim evaluated, "The January consumer price inflation rate expanded as expected compared to the previous month, with the exchange rate remaining at a high level and international oil prices rising," and added, "Core inflation remained stable, slightly below 2%."
He continued, "Going forward, the consumer price inflation rate is expected to slow down for a while due to the base effects of petroleum and agricultural product prices and low demand pressure," and "thereafter, it is expected to stabilize around the target level (2%)."
The Statistics Korea announced on the same day that the January consumer price index was 115.71 (2020=100), rising 2.2% compared to a year earlier. This is the highest inflation rate since July last year (2.6%).
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