South Korea’s Inflation Cools

SEOUL (Reuters) – South Korea’s consumer inflation cooled more than forecast in September, falling below the central bank’s target for the first time since early 2021, amid expectations of imminent policy easing.

The consumer price index (CPI) rose 1.6% in September from a year earlier, after a rise of 1.9% in August, according to data from Statistics Korea released on Wednesday.

This figure was weaker than the median 1.9% increase predicted in a Reuters poll of economists and marks the weakest annual increase since February 2021.

The reading was below the Bank of Korea’s (BOK) medium-term target of 2% and comes as discussions grow among policymakers and market participants about a possible interest rate cut, with the next policy meeting set for Oct. 11.

At its last meeting in August, the BOK held interest rates at a 16-year high of 3.50%, despite slowing inflation and domestic demand, citing concerns over financial stability risks from a heated housing market.

CPI rose 0.1% on a monthly basis, lower than the 0.4% increase the previous month and the 0.3% expected by economists. Prices of petroleum products decreased 4.1% and private services dropped 0.4%, which offset gains in agricultural products and public utilities.

Core CPI, excluding volatile food and energy items, rose 2.0% year-on-year, slower than the 2.1% increase the previous month and the weakest since November 2021.