South Korea Posts Deflation for the First Time on Record

Consumer prices in South Korea fell 0.4 year-on-year in September 2019, following a flat reading in the previous month and compared with market expectations of a 0.3 percent decline. That was the first time the country recorded deflation on an annual basis since data releases began in 1965, mainly due to a plunge in fresh food prices.

Prices of food and non-alcoholic beverages declined by 4.1 percent in September, faster than a 3.3 percent decrease in the prior month. It was the second yearly fall in the sub-index since July 2016 and the steepest since February 1987, amid a slump in cost of fresh foods (-15.3 percent vs -13.9 percent in August), namely vegetables (-21.4 percent vs -17.9 percent). In addition, cost of recreation & culture went down further (-1.3 percent vs -0.2 percent); and prices of education dropped (-0.8 percent vs 1 percent). Also, cost eased for housing & utilities (1.1 percent vs 1.2 percent); furnishings & household equipment (1.4 percent vs 1.9 percent); miscellaneous goods & services (1.4 percent vs 1.5 percent); and restaurants & hotels (1.4 percent vs 1.7 percent).

Meanwhile, prices decreased less for transportation (-1.6 percent vs -1.9 percent); and communication (-1.8 percent vs -2.2 percent) and rose at a faster pace for health (1.1 percent vs 0.9 percent); and alcoholic beverages & tobacco (1.1 percent vs 0.8 percent). 

For 2019, the Bank of Korea targets inflation rate at 2 percent.

The core CPI, which excludes oil and agricultural products, advanced 0.6 percent over a year earlier in September, following a 0.9 percent gain in August.

On a monthly basis, consumer prices increased 0.4 percent in September after increasing 0.2 percent in August, and slightly lower than market forecasts of a 0.45 percent rise.

South Korea Posts Deflation for the First Time on Record

Statistics Korea l Mario |
10/1/2019 10:17:15 AM