The Financial institution of Korea projected that subsequent yr’s shopper worth inflation price will present steady developments round 2%. Nevertheless, it recognized sustained excessive alternate charges and uncertainties in agricultural and livestock product costs as potential dangers.
The BOK held a press briefing on the Evaluation of Value Stability Goal Operation Standing on Dec. 17 and acknowledged, “Regardless of the lately elevated alternate charges, core inflation (excluding meals and vitality costs) stays steady and worldwide oil worth weak spot is predicted to proceed.”
In response to the BOK, shopper worth inflation charges moved across the BOK’s goal of two% year-over-year from January to September this yr, however the enhance expanded considerably in October (2.1%) and November (2.4%). This was because of important will increase in agricultural and livestock product costs and elevated alternate price volatility beginning in October. The BOK analyzed that through the two months of October and November, the sharp rise within the won-dollar alternate price contributed roughly 0.1 share factors to inflation, whereas the surge in agricultural and livestock product costs because of climate deterioration contributed about 0.2 share factors.
Nevertheless, it projected that inflationary pressures will lower subsequent yr, returning near the two% degree once more. Chae Min-seok, deputy director of the Value Development Workforce on the BOK’s Analysis Division, mentioned, “Agricultural, livestock, and fishery product costs, which have continued excessive development, are anticipated to see their upward pattern decelerate, and petroleum product costs are additionally anticipated to progressively decline,” including, “Core inflation can also be anticipated to maneuver round 2% subsequent yr because it did this yr, so subsequent yr’s shopper worth inflation price is predicted to be on the 2% degree as projected in November.” The BOK had projected subsequent yr’s shopper worth inflation price at 2.1% final November.
Nevertheless, it cited the at present hovering alternate charges and uncertainties in agricultural and livestock product costs as dangers. Chae acknowledged, “If the won-dollar alternate price continues on the present excessive degree of round 1,470 received all through subsequent yr, the patron worth inflation price might rise to the early-to-mid 2% vary, barely exceeding the present projection of two.1%, which requires consideration.” The BOK defined that within the inflation forecast path, the sustainability of elevated alternate price ranges and uncertainties associated to agricultural, livestock, and fishery product costs exist as upward dangers, whereas international crude oil oversupply and strengthened authorities worth stability measures exist as downward dangers.
