South Korea's December 2023 Consumer Inflation Update
KOSPI 
The consumer inflation in South Korea eased for the second consecutive month in December 2023. The consumer price index (CPI) rose by 3.2% year-on-year to 112.72, which was slightly lower than the 3.3% increase in November. Economists polled in a Reuters survey had expected a median 3.3% rise in the month, indicating that the actual figure came in below market expectations. On a monthly basis, the index remained unchanged, missing the anticipated 0.2% rise after a decline of 0.5% in the previous month.
The figures indicate that South Korea’s annual consumer inflation is gradually easing, with the full-year 2023 consumer inflation easing to 3.6% from 5.1% in 2022. This decline suggests that price pressures are expected to ease towards the Bank of Korea’s target level of 2% by the end of the following year. The cooling inflation is anticipated to make a restrictive policy rate at 3.50% difficult to justify to the public. As a result, economists foresee the Bank of Korea initiating policy easing from the third quarter of the next year.
In December 2023, the consumer price index slowed to 3.2% year-on-year, marking the lowest figure since June. The slowdown was mainly attributed to a decrease in the cost of food. Notably, prices of fresh food items surged by 14.5% year-on-year in December, while prices of industrial goods rose by 2.1% year-on-year, showing a deceleration from the 2.5% increase in November. The figures indicate a nuanced inflation scenario, with differing trends observed across various sectors, influencing the overall inflation rate.
The figures for South Korea’s consumer inflation provide a comprehensive view of the economic landscape. The annual consumer inflation easing, coupled with specific sectoral trends, such as the surge in fresh food prices and the deceleration in industrial goods prices, collectively shape the inflation outlook for the country. These trends also shed light on the factors influencing consumer spending and the potential implications for monetary policy adjustments.
The information provided is for general informational purposes only and should not be considered as financial advice.