Korea’s Inflation Cools More Than Expected, Offering Some Relief

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Or sign-in if you have an account.nj}0nqclllqt5fr)6dsak0a5_media_dl_1.png Ministry of Data and Statistics(Bloomberg) — South Korea’s consumer inflation slowed more than expected in July, easing back below 3% and offering policymakers some relief after price growth accelerated to its fastest pace since late 2023 the previous month.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountConsumer prices rose 2.8% from a year earlier in July, the slowest pace since April, after the 3.2% pace in June, data from the Ministry of Data and Statistics showed Tuesday. The reading compared with the median estimate of 3% in a Bloomberg survey of economists.Core inflation, which strips out volatile food and energy prices, picked up a tad to 2.6%, suggesting underlying price pressures remained broadly stable despite the moderation in headline inflation.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againWhile the slowdown may ease concerns that inflation is accelerating again, the reading is still well above the Bank of Korea’s target rate, and is therefore unlikely to alter its policy outlook. Officials have continued to argue that resilient consumer prices, growth and elevated housing prices warrant maintaining a tightening bias.The inflation report comes after the central bank raised its benchmark interest rate by 25 basis points to 2.75% last month, its first increase since January 2023. Governor Shin Hyun Song said inflation is expected to stay above the bank’s 2% target for quite some time as conflicts in the Middle East continue, and any further rate hikes will depend on price pressures, growth and financial market stability.What Bloomberg Economics Says…“The central bank will focus on the persistent rise in core inflation, which indicates underlying price pressures are still building. The data strengthen the case for a back-to-back rate hike in August.”— Hyosung Kwon, economistClick here to read the full reportThe latest data also follow another month of robust export growth, with semiconductor shipments continuing to underpin South Korea’s artificial intelligence-driven expansion. Strong investment and exports have helped offset weakness in pockets of the domestic economy, while supporting expectations that price pressures could remain persistent.South Korea’s economy expanded 0.6% in the second quarter from the previous three months, beating economists’ expectations. The government expects growth to reach 3% this year, a projection that’s more optimistic than forecasts by the BOK and the International Monetary Fund, as AI-related investments continue to boost exports and domestic demand.The advance in the CPI was led by transportation costs, which rose 7.7% in July from a year earlier, while recreation and culture gained 5.5%. Food and lodging increased 2.8% and household goods and services climbed 3%.Broader consumer-price increases remained modest, with communication costs gaining 0.7% and food and non-alcoholic beverage prices rising 0.9%.(Updates with comment from economist.)This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.