The Bank of Korea Holds ‘Inflation Situation Review Meeting’
“Oil Prices Strong, Agricultural, Marine, and Livestock Products Also Rising”
On the morning of the 2nd, the Bank of Korea held a ‘Inflation Situation Review Meeting’ in the meeting room on the 16th floor of its headquarters, chaired by Vice Governor Kim Woong, to examine the recent inflation situation and future inflation trends. Vice Governor Kim Woong is speaking at the economic outlook briefing held at the Bank of Korea in Jung-gu, Seoul. [Provided by the Bank of Korea]
[Herald Economy=Reporter Kim Byori] Kim Woong, Vice Governor of the Bank of Korea, commented on the recent inflation trends, stating, “The consumer price index is expected to gradually decrease to around 2% in the future,” while adding, “However, it is necessary to keep an eye on the impact of the increased exchange rate on future prices.”
The Bank of Korea announced that it held a ‘Inflation Situation Review Meeting’ on the morning of the 2nd at the 16th floor meeting room of its headquarters, chaired by Vice Governor Kim Woong, to review recent inflation situations and future inflation trends.
Vice Governor Kim stated, “While prices for travel-related services decreased as expected in the consumer price index, the strength of oil prices continued, and the increase in agricultural, marine, and livestock products expanded significantly, leading to a 2.4% rise, the same as the previous month. The rise in agricultural, marine, and livestock products is due to adverse weather conditions, while the rise in oil prices is influenced by the exchange rate increase.”
In November, the consumer price index increased by 2.4% year-on-year, maintaining the same growth rate as the previous month. The service prices acted as a downward factor (-0.1 percentage points), but agricultural, marine, and livestock products and oil each rose by 0.17 percentage points and 0.05 percentage points, respectively, driving up the consumer price index.
For agricultural, marine, and livestock products, the increase rate generally grew due to adverse weather conditions during the harvest period. Particularly, agricultural products rose by 5.4% year-on-year, approximately five times larger than the previous month (1.1%). Marine products also saw an increase from 5.9% to 6.8% during the same period, up by 0.9 percentage points. Livestock products maintained a similar level at 5.3%.
The oil price increase rate also rose by 1.1 percentage points, from 4.8% in October to 5.9% in November, due to the exchange rate increase and reduction in the oil tax cut rate.
However, the core inflation rate, which shows inflation trends excluding temporary factors, decreased by 0.2 percentage points from 2.2% in October to 2% in November. The price increase rate for core goods fell by 0.1 percentage points from 1.4% to 1.3%, and services decreased by 0.2 percentage points from 2.5% to 2.3% due to the disappearance of the holiday effect.
The inflation rate for everyday items with high purchase frequency and expenditure weight in the consumer price index expanded by 0.4 percentage points from 2.5% to 2.9%.
The expected inflation rate, the public’s subjective forecast of inflation over the next year, stayed in the mid-2% range at 2.6% in November.
Regarding inflation trends, Vice Governor Kim said, “While the core inflation shows a stable trend and the rise in agricultural, marine, and livestock product prices is easing, the consumer price index is expected to gradually decrease to around 2%.” However, he noted, “It is necessary to watch the impact of the increased exchange rate on future prices.” The won/dollar exchange rate continues its unstable trend around the 1460 won range.
He added, “As the consumer price index has shown a sustained 2% mid-level increase and everyday item prices have risen, we will maintain vigilance and carefully monitor the future inflation situation.”