South Korea Dec inflation steady at 5%, as expected

Lee Sang-jae, owner of a meat restaurant, cuts meat at a restaurant in Seoul, South Korea, June 23, 2022. Picture taken June 23, 2022. REUTERS/ Heo Ran/File photo

SEOUL  – South Korea’s consumer prices in December rose 5 percent from a year earlier, official data showed on Friday, matching market expectations and the pace seen in November.

The consumer price index (CPI) was 0.2 percent higher than in November, when it showed a 0.1-percent monthly decline, according to Statistics Korea data. The median forecasts from a Reuters poll were for the CPI to be up 0.1 percent on the month and 5 percent on a year before.

A breakdown of the data showed prices of agricultural products had been 1.6 percent lower than in December 2021. But utility prices jumped 23.2 percent and private service prices 6.0 percent, keeping the overall annual inflation rate high. The annual rate peaked at 6.3 percent in July.

Both the central bank and government have said that inflation will ease only gradually and that there is huge uncertainty about the near-term inflation path.

After the data release, the Bank of Korea said in a statement it expected annual inflation to hover around 5 percent through early 2023, with both upside and downside risks.

Separately, the finance ministry said it would continue efforts for price stabilization, citing price adjustments at the beginning of the new year and increased demand during Lunar New Year holidays as risk factors.

The Bank of Korea has raised its policy interest rate by 275 basis points since August 2021 and is widely expected to implement just one more rise in the current cycle, in early 2023.

The core CPI, which excludes volatile food and energy prices, was up 4.1 percent in December on a year earlier, after November’s annual rise of 4.3 percent, the fastest in nearly 14 years. The fall in the core annual rate in December was the first since November 2021.

The average level of the CPI for all of 2022 was 5.1 percent higher than a year before, sharply accelerating from the 2.5 percent rise seen in 2021. No year-average inflation rate has been so high since 1998.