Inflation in Korea

Korea Inflation | Economic News & Forecasts

Korea - Inflation

Inflation comes in at highest level since November 1998 in July

Consumer prices rose 0.48% in July over the previous month, which was below June's 0.61% rise. Looking at the details of the release, prices for housing and utilities remained flat in July, while prices for food and non-alcoholic beverages picked up pace.

Inflation inched up to 6.3% in July, following June’s 6.0%. July's reading represented the highest inflation rate since November 1998. The reading was broadly in line with market expectations and moved further above the Bank of Korea’s 2.0% inflation target. Annual average inflation rose to 4.1% in July (June: 3.8%). Finally, core inflation was steady, coming in at June's 3.9% in July.

Stable core inflation, coupled with a softer month-on-month CPI increase, could be early signs of easing price pressures resulting from a slowdown in demand, which would be consistent with July’s PMI release. Inflation is expected to decelerate towards the end of the year amid further tightening expected from the BOK.

Analysts from Nomura commented:

“With oil prices moderating, we expect inflation to peak in Q3, as the effects of electricity price hikes should fade over time, while potential service price gains appear limited, as consumers are likely to cut back on spending in response to higher interest rates. […] The balance of risks to our inflation forecast is tilted slightly to the downside, with oil prices stabilizing and consumption moderating. However, rising agricultural prices remain an upside risk to the near-term inflation outlook.”

FocusEconomics panelists project inflation averaging 4.8% in 2022, which is up 0.3 percentage points from last month’s forecast, and 2.6% in 2023.

Korea - Inflation Data

2015   2016   2017   2018   2019  
Inflation Rate (CPI, annual variation in %)0.7  1.0  1.9  1.5  0.4  

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Korea Inflation Chart


Korea Inflation
Note: Annual variation of consumer price index (CPI) in %.
Source: Korea National Statistics Office and FocusEconomics calculations.

Korea Facts

Value Change Date
Bond Yield1.681.55 %Dec 31
Exchange Rate1,1560.21 %Dec 31

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