(Corrects August determine to 2.0%, from 1.9%, in paragraph 2)
By Jihoon Lee
SEOUL (Reuters) -South Korea’s shopper inflation cooled greater than forecast in September and beneath the central financial institution’s goal for the primary time since early 2021, amid rising expectations of an imminent coverage easing.
The patron worth index (CPI) rose 1.6% in September from a 12 months earlier, after an increase of two.0% in August, information from Statistics Korea confirmed on Wednesday.
It was weaker than a median 1.9% improve tipped in a Reuters ballot of economists and marked the weakest annual improve since February 2021.
The studying was beneath the Financial institution of Korea’s (BOK) medium-term goal of two% and comes amid rising speak amongst policymakers and market members about an imminent rate of interest reduce with the following coverage assembly scheduled for Oct. 11.
South Korea’s policy-sensitive three-year treasury bond yield fell on Wednesday by 3.4 foundation factors to 2.777%, the bottom stage since April 2022.
Finance Minister Choi Sang-mok and BOK Deputy Governor Kim Woong each mentioned the value stabilisation development was persevering with.
“The information as soon as once more backed the case for fee cuts,” mentioned Ahn Jae-kyun, a fixed-income analyst at Shinhan Securities, who expects the BOK to decrease rates of interest subsequent week.
“There’s a priority of the BOK decreasing rates of interest after seeing inflation coming right down to the 1% vary from 2%, however what’s completely different this time is family debt and the central financial institution’s stance on it,” Ahn mentioned.
The BOK at its final assembly in August held rates of interest at a 16-year excessive of three.50% regardless of slowing inflation and home demand, as board members have been involved about monetary stability dangers stemming from a scorching housing market.
CPI rose 0.1% on a month-to-month foundation, additionally slower than 0.4% within the earlier month and 0.3% anticipated by economists. Costs of petroleum merchandise fell 4.1% and personal companies declined 0.4%, offsetting beneficial properties in agricultural merchandise and public utilities.
Core CPI, which excludes risky meals and power objects, rose 2.0% year-on-year, slower than the two.1% rise the earlier month and the weakest since November 2021.
