The Bank of Korea: "Inflation to fluctuate around 2.0% going forward... High uncertainty in tariffs and exchange rates"

'Price Situation Review Meeting' Held on the 6th

The Bank of Korea stated that the consumer price inflation rate will move around 2.0% per year going forward, but noted that there is significant uncertainty related to major countries' trade conflicts and exchange rate movements.

Yonhap News

On the 6th, the Bank of Korea held a price situation review meeting and made this assessment. Factors that raise prices such as high exchange rates and factors that lower prices such as weak demand pressure are conflicting, so the consumer price inflation rate is expected to fluctuate near the target level (annual 2.0%) as projected in the February forecast path. The Bank of Korea maintained its consumer price inflation forecast of 1.9% for this year in the revised economic outlook announced last month.

Kim Woong, Deputy Governor of the Bank of Korea, explained, "In February, the consumer price inflation rate recorded 2.0%, lower than the previous month, as core inflation (1.8%) remained stable and the rise in agricultural and petroleum prices slowed down." Prices of agricultural, livestock, and fishery products slowed from 1.9% in the previous month to 1.0% in February due to a base effect caused by a decline in some fruit prices such as strawberries, although vegetable prices remain high. The increase in petroleum prices also decreased from 7.3% to 6.3%. Core inflation also fell from 1.9% to 1.8%, mainly due to personal services excluding dining out. The living cost inflation rate remained at the mid-2% level, recording 2.6% following 2.5% in the previous month.

While future inflation is expected to move around the target level, there are significant uncertainties along the path. Deputy Governor Kim said, "There is significant uncertainty related to geopolitical situations, major countries' trade conflicts, exchange rate movements, and domestic demand trends."

The Statistics Korea announced that the consumer price index for February was 116.08 (2020=100), rising 2.0% compared to the same month last year. Although it fell by 0.2 percentage points from the previous month (2.2%), it recorded a 2% range for two consecutive months.