In Seoul’s Myeongdong shopping district, pedestrians were seen walking past food stalls and shops on March 26, 2024, according to a photograph by Anthony Wallace from AFP.
Consumer inflation in South Korea moderated more than anticipated in September, falling below the central bank’s target for the first time since early 2021. This development has spurred expectations of an imminent policy easing. Data released by Statistics Korea on Wednesday indicated that the consumer price index (CPI) rose by 1.6% in September compared to the same month the previous year, following a 1.9% increase in August.
This figure was lower than the median 1.9% increase predicted by a Reuters poll of economists and marked the smallest annual rise since February 2021. The reading came in below the Bank of Korea’s medium-term target of 2%, prompting discussions among policymakers and market participants about a potential interest rate reduction at the upcoming policy meeting on October 11.
At its last meeting in August, the Bank of Korea maintained interest rates at a 16-year high of 3.50%, despite decelerating inflation and weakening domestic demand. The decision was influenced by concerns among board members regarding financial stability risks posed by a heated housing market.
On a monthly basis, the CPI increased by 0.1%, which was slower than the 0.4% gain observed the previous month and the expected 0.3% rise projected by economists. Declines in petroleum product prices by 4.1% and private services by 0.4% countered gains in agricultural products and public utilities.
The core CPI, which excludes volatile food and energy items, rose by 2.0% year-on-year, representing a deceleration from the 2.1% increase recorded in the previous month and marking the slowest growth since November 2021.
