Inflation cools to 4% range for 1st time in 10 months

• Published date: 06 March 2023
• Publication title: The Korea Times

Consumer prices in Korea eased to the 4-percent level for the first time in 10 months in February, raising hopes that inflation will cool down further to the government's 2023 target of the mid-3 percent range.

But Korea continues to face obstacles in its efforts to curb inflation, as the growth of utility costs reached an all-time high of 28.4 percent, while core inflation ? a gauge of long-term price trends ? climbed 4 percent.

According to Statistics Korea, Monday, consumer prices rose 4.8 percent last month from a year earlier, after hovering at around 5 percent since May 2022.

Inflation falling to a 10-month low is in line with the Ministry of Economy and Finance's forecast that consumer prices, after reaching a 24-year-high of 5.1 percent for all of 2022, will fall to the 4-percent range within the first half of 2023 before slowing down to the government's target of 3.5 percent in the second half of this year.

The Bank of Korea (BOK) also forecast 2023 inflation at 3.6 percent.

"Inflation is anticipated to become remarkably stable over time, unless there are external shocks," the finance ministry said.

It noted that food and service sectors in the future can be adversely affected by possible hikes in global energy and raw material prices due to the prolonged war in Ukraine.

In a separate announcement, the BOK said inflation in February matches the projection of its monetary policy board last month when it ended a tightening cycle ? which continued since August 2021 ? and froze the benchmark interest rate at 3.5 percent.

"Consumer prices in March are likely to fall significantly due to a much-anticipated base effect linked to global oil prices, although the situation concerning energy prices can change and heighten economic uncertainties," the...