Pedestrians walk past restaurants and shops in the Myeongdong shopping district in Seoul on March 26, 2024.
Anthony Wallace AFP | Getty Images
Consumer inflation in South Korea fell more than forecast in September and fell below the central bank’s targets for the first time since early 2021, amid growing expectations of an imminent policy cut.
The consumer price index rose 1.6% in September from a year earlier, after rising 1.9% in August, data from Statistics Korea showed on Wednesday.
It was weaker than the 1.9% average increase noted in a Reuters poll of economists and marked the weakest annual increase since February 2021.
The reading was below the Bank of Korea’s medium-term target of 2% and comes amid growing talk among policymakers and market participants about an imminent interest rate cut at the next policy meeting scheduled for Oct. 11.
The BOK at its last meeting in August held interest rates at a 16-year high of 3.50% despite low inflation and domestic demand, as board members worried about risks to financial stability from a hot housing market.
CPI rose 0.1% monthly, also slower than last month’s 0.4% gain and the 0.3% expected by economists. Prices of fuel products fell by 4.1% and private services fell by 0.4%, leading to gains in agricultural products and public services.
Core CPI, which excludes volatile food and energy items, rose 2.0% year-on-year, slower than last month’s 2.1% rise and the weakest since November 2021.