South Korea December consumer inflation up weaker-than-expected 3.2%

SOUTH Korea’s annual consumer inflation eased for a second month in December and came in below market expectations, backing policymakers’ outlook that price pressure will gradually ease through 2024.

The December consumer price index (CPI) gained 3.2 per cent from a year earlier, compared with a rise of 3.3 per cent in November, and was weaker than a median 3.3 per cent rise tipped in a Reuters survey.

The index flatlined on a monthly basis.

Friday’s inflation data supports the Bank of Korea’s view on the near-term inflation path, which is that price pressure will gradually ease to near the bank’s target level of 2 per cent towards the end of next year as policymakers gear up to a pivot to monetary policy easing.

For the full year of 2023, consumer inflation eased to 3.6 per cent from 5.1 per cent in 2022.

Most economists see the BOK as having reached its peak rate and expect it to start easing policy from the third quarter of next year as cooling inflation makes a restrictive policy rate at 3.50 per cent difficult to justify to the public.

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A breakdown of the data showed prices of fresh food items surged 14.5 per cent year-on-year in December but prices of industrial goods rose 2.1 per cent year-on-year, slowing from 2.5 per cent in November. REUTERS