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South Korea’s CPI inflation rate fell to 1.6% year-on-year in September due to lower transportation prices
Core CPI rose 1.8% y/y compared to 1.9% y/y in August
Fresh food prices stabilize at a low growth of 3% year-on-year
The CPI reading increases the odds of BOK easing at the October meeting
CPI inflation fell to 1.6% year-on-year in September from 2.0% year-on-year in August, falling below the central bank’s target of 2% for the first time since March 2021, according to data from statistics office COstat. The headline inflation reading came in below expectations of economists polled by Bloomberg who expected inflation to fall only slightly to 1.9% year-on-year in September. On a monthly basis, the CPI rose by 0.1% m/m compared to 0.4% m/m in August.
The main reason behind the weak inflation was transport prices, which fell by 1.2% year-on-year in September compared to an increase of 1.8% year-on-year in August. Meanwhile, fresh food prices, which were the main driver of inflation in previous months, rose by 3.4% year-on-year, with fresh vegetable prices rising by 11.6% year-on-year, and fresh fruit prices falling by 2.9% year-on-year. . It should be noted that fresh food prices were affected by a high base related to fruit prices, as the former rose by 25.8% on an annual basis in September 2023, but this was more or less compensated for by the increase in vegetable prices.