South Korea’s inflation rates climbed up in November to near about 1.5% year on year. From 45 months low in October as the country grapples with the weakening of the Korean won and the slowdown of exports. The figure was higher than the October inflation reading of 1.3%. That is also lower than the 1.7% that is expected by the economists polled by Reuters.
Last Thursday South Korea’s central bank unexpectedly cut off the rates by 25 base points to 3%. That is the first time the Bank of Korea has enacted two back-to-back cuts since 2009. According to the BOK statement, this cut is addressed as the “mitigate downside risks to the economy.”
South Korea narrowly avoided a technical slump in the third quarter with the GDP growing 0.1% quarter on quarter. This is according to the Bank’s advance calculations of the following compaction of 0.2% in the second quarter.
On the inflation rate, the BOK said in its statement that the price is already being stabilized. It is anticipated to stay steady as a result of decreased demand pressure and falling global oil prices.
Additionally, the BOK lowered its headline inflation forecast for 2024 and 2025 from 2.5% and 2.1% to 2.3% and 1.9%, respectively.
The bank also added
“The future path of inflation is likely to be affected by movements in exchange rates and global oil prices, by economic growth at home and abroad, and by adjustments in public utility fees,”
Over October and November, South Korea’s currency depreciated against the US dollar, reaching a two-year high of 1,411.31 as concerns about tariffs from the incoming Trump government grew. The United States is South Korea’s second-largest trading partner, according to data from the World Bank-created World Integrated Trade Solution website.
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