In October, South Korea's consumer prices experienced their slowest growth in nearly four years, reinforcing the belief that the central bank will persist in easing its monetary policy. The consumer price index, or CPI, observed a year-on-year increase of just 1.3% and remained static compared to the previous month.
These current figures, representing the weakest growth since January 2021, fell short of the 1.4% increase that analysts anticipated during their survey. The Bank of Korea highlighted that consumer prices are likely to approach its target of 2% by year-end. Rising inflation could be anticipated temporarily due to low base effects from last year, yet inflationary pressures are being alleviated by declining global oil and food prices. In a note issued on October 31, analysts at ING mentioned that the country's CPI is expected to stay below the 2% mark for an extended period as measures are put in place to curb inflation.
"The government's efforts to mitigate inflation are ongoing, as evidenced by stable utility prices. Furthermore, the Seoul Metropolitan Government has delayed its plans to increase subway fares until next year," the analysts noted. Consequently, the Bank of Korea is expected to maintain its policy easing, although at a gradual pace..