South Korea inflation eased for second month in December

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

SEOUL  -South Korea’s annual consumer inflation eased for a second month in December and came in below market expectations, backing policymakers’ outlook that price pressure will gradually ease through 2024.

The December consumer price index (CPI) gained 3.2 percent from a year earlier, compared with a rise of 3.3-percent in November, and was weaker than a median 3.3-percent rise tipped in a Reuters survey.

The index flatlined on a monthly basis.

Friday’s inflation data supports the Bank of Korea’s view on the near-term inflation path, which is that price pressure will gradually ease to near the bank’s target level of 2 percent toward the end of next year as policymakers gear up to a pivot to monetary policy easing.

For the 2023 full year, consumer inflation eased to 3.6 percent from 5.1 percent in 2022.

READ: South Korea inflation eases in relief to policymakers

Most economists see the BOK as having reached its peak rate and expect it to start easing policy from the third quarter of next year as cooling inflation makes a restrictive policy rate at 3.5 percent difficult to justify to the public.

READ: South Korea’s economic growth beats estimates, backing rate pause

A breakdown of the data showed prices of fresh food items surged 14.5 percent year-on-year in December but prices of industrial goods rose 2.1 percent year-on-year, slowing from 2.5 percent in November.