South Korean Inflation Damped by Commodities Rout, Holidays

  • Consumer price gains slow to 0.6% from this time last year
  • Month-on-month, prices fall 0.2%; first drop since Nov. 2014

South Korea’s inflation rate eased to 0.6 percent in September from a year ago amid the rout in global commodity markets. Prices fell 0.2 percent from August, when Koreans increased spending on travel and entertainment during the summer holiday season.

The month-on-month drop compared with estimates from economists for a 0.2 percent gain, while the year-on-year figure came in slightly lower than projections.

“Month-on-month prices are likely to remain close to zero for the rest of this year because of oil and weaker spending,” said Baek Da Mi, a research fellow at Hyundai Research Institute. Baek said Friday’s data increases the likelihood that inflation measured year-on-year will fall short of the central bank’s 0.9 percent forecast.

Transportation costs fell 1.4 percent in September from August, affected by holidays and lower fuel costs, according to the statistics office. Entertainment prices fell 1.2 percent month-on-month, while processed food dropped 0.5 percent.

The Bank of Korea’s target range for inflation is 2.5 percent to 3.5 percent. It plans to set a goal to be applied from 2016.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE