South Korea's inflation slows in Oct, core CPI declines at fastest pace in over 21 years

[SEOUL] South Korea's annual inflation slowed in October and the core rate declined at its fastest pace in over 21 years as the coronavirus pandemic dampened domestic demand and a temporary government subsidy on mobile phone bills dragged on the data.

The consumer price index rose 0.1 per cent in October from a year earlier, Statistics Korea data showed, well below a median 0.7 per cent rise tipped in a Reuters survey and the lowest figure in four months. Inflation accelerated 1.0 per cent in September.

Core CPI for October, excluding volatile energy and food prices, declined 0.3 per cent year-on-year, marking the sharpest fall since September 1999 and much slower than a 0.6 per cent rise the previous month. Month-on-month, core inflation tumbled 0.7 per cent in October, the worst reading since core data began to be compiled in 1990.

"The government's 20,000 won (S$24) phone bill subsidy as part of the fourth supplementary budget temporarily pulled down the core and headline data," a government official told Reuters, adding the core rate will likely return to a positive territory in November.

The government has rolled out a total 310 trillion won (S$374 billion) stimulus, including the 7.8 trillion won extra budget approved in late September, to soften coronavirus impacts on households and small businesses amid tight social distancing restrictions.

Headline consumer prices, meanwhile, unexpectedly fell 0.6 per cent from a month earlier versus a 0.1 per cent rise tipped in the poll.

REUTERS