Korean Consumer Prices Rise at Fastest Pace in More Than a Year

  • Oil's impact is starting to wash out of year-on-year figures
  • Inflation is still below the Bank of Korea's new target of 2%

Consumer prices in South Korea increased the most since August 2014 as the the impact of the oil market rout began to wash out of year-on-year comparisons and the cost of food and clothing rose.

Consumer price index rose 1.3 percent in December from a year earlier, beating estimates for a 1.1 percent gain, according to figures released by Statistics Korea on Thursday. Core CPI, which excludes oil and agricultural products, increased 2.4 percent.

The improvement in December still leaves inflation well below the Bank of Korea’s new target of 2 percent. The annual rate for 2015 was 0.7 percent, the lowest on record since the agency started compiling data in 1965.

"The biggest factor in the rise was the drop in the base effect of oil," said Woo Young Jae, a director at Statistics Korea. "Inflation next year will depend on what happens with oil prices."

The cost of processed food and beverages rose 1.9 percent in December from a year earlier, while clothing increased by 1.3 percent.

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