SOUTH Korea’s consumer inflation quickened to a six-month high in January, government data showed on Wednesday, coming in higher than market expectations on pressure from a weak local currency.
The consumer price index (CPI) rose 2.2 per cent from a year earlier, after climbing 1.9 per cent in the previous month, according to Statistics Korea. That compared with a median 1.97 per cent increase forecast in a Reuters poll.
Inflation accelerated for the fourth straight month and marked the fastest since July 2024. It was also higher than the central bank’s medium-term target of 2 per cent.
Last month, the Bank of Korea unexpectedly kept its policy interest rate unchanged, after two straight meetings of rate cuts, signalling that it needed to wait for the domestic political turmoil weighing on the currency to stabilise before it could make further cuts.
“Going forward, consumer inflation will show a slowing trend for some time on base effects and low demand pressure, and is expected to stabilise around the target level afterwards,” the BOK said after the data release.
South Korea’s import prices, which affect consumer prices with a time lag of one or two months, rose in December at the fastest pace in five months underpinned by a weak local currency.
In January, the won strengthened 1.3 per cent against the dollar, after three straight months of declines. In 2024, the currency was the worst performer in Asia, weakening more than 12 per cent and posting its biggest drop in 16 years.
On a monthly basis, the CPI rose 0.7 per cent, also faster than the previous month’s 0.4 per cent gain and the fastest since August 2023, led by petroleum products. REUTERS
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