South Korea's Sept inflation slows but tightening bias seen intact
Reuters
Published Oct 04, 2022 07:06PM ET
Updated Oct 04, 2022 10:21PM ET
By Choonsik Yoo and Jihoon Lee
SEOUL (Reuters) -South Korea's consumer inflation slowed for a second month in September, data showed on Wednesday, but economists said the data would do little to change the central bank's tightening bias amid growing talk it could opt for a bigger hike next week.
Economists said the latest data suggested inflation was at or past its peak, but expected the central bank to stick to its stance given the weakening won and an aggressive monetary policy in the United States.
The consumer price index (CPI) rose 5.6% in September from the same month a year ago, according to the Statistics Korea data, slowing for the second straight month. In August, inflation cooled to 5.7%, the first slowdown in seven months.
An aggressive tightening stance by the U.S. Federal Reserve has raised economists' expectations that the Bank of Korea could raise the policy interest rate by a bigger-than-usual 50 basis points next week for the second time on record.
"I think overall inflation pressures have already past their peak in South Korea, but the Bank of Korea is not making policy decisions only on inflation numbers but has to consider the U.S. policy and the foreign exchange rate," said Moon Hong-cheol, economist at DB Financial Investment.
September's annual rate of growth in the CPI was the slowest in four months and slightly below economists' median forecast for 5.7%, although predictions ranged widely.
The Bank of Korea has raised its policy interest rate by a total of 2.0 percentage points since August last year from record-low 0.5% to fight inflation and Governor Rhee Chang-yong has said tightening stance would continue for the time being.
The Bank of Korea's policy board next meets on Oct. 12.
The Bank of Korea affirmed at an internal meeting on Wednesday its previous view that inflation prospects were uncertain, listing the won and global oil prices as the main possible drivers of future inflation.
The won's steep fall has raised concerns about possible capital flight and rising import prices. The currency has weakened by 16% against the dollar so far this year.
The core consumer price index, which strips off volatile food and energy prices, fell month-on-month for the first time in a year although its annual rate accelerated to 4.1% from 4.0% in August.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.