BOK Expects February Inflation Around 2% and Monitors Oil and FX Volatility

According to The Financial News, the Bank of Korea (BOK) expects both upward and downward factors to affect inflation in February. Planned price hikes for some items, including electronic devices, are seen as upward pressures, while lower oil prices compared with a year earlier are expected to weigh on inflation. As a result, the BOK projects the inflation rate will hover around its 2% target.
On the 3rd, the BOK held a "Price Situation Review Meeting" chaired by Assistant Deputy Governor Kim Woong to examine recent inflation trends and assess the outlook.
In January this year, consumer prices rose 2.0% from a year earlier, down 0.3 percentage points from December’s 2.3%. The slowdown was mainly due to weaker international oil prices and a decline in the won–dollar exchange rate, which sharply reduced the increase in petroleum product prices. The pace of price gains for agricultural, livestock and fishery products also eased.
Assistant Deputy Governor Kim Woong explained, "The inflation rate for petroleum products plunged from 6.1% in December last year to 0.0% in January this year, and prices of agricultural, livestock and fishery products also slowed from 4.1% to 2.6% due to increased shipments supported by favorable weather conditions."
By item, petroleum products (minus 0.24 percentage points) and agricultural, livestock and fishery products (minus 0.11 percentage points) acted as downward contributors to consumer price inflation. In contrast, core goods provided a slight upward contribution of plus 0.03 percentage points.
The core inflation rate, excluding food and energy, stood at 2.0%, unchanged from the previous month. Prices of core goods, particularly durable goods, increased, while service prices remained at the same level as a month earlier.
The living cost index, which covers 144 items with high purchase frequency and a large share of household spending, rose 2.2%. This marked a sharp decline from 2.8% in the previous month.
However, the BOK assessed that uncertainty surrounding the future inflation path remains. Kim Woong said, "While inflation is expected to remain generally stable going forward, we plan to closely review the outlook for prices in our February economic forecast, given the recent sharp increase in volatility in international oil prices and exchange rates, and then announce our projected inflation path."
imne@fnnews.com Hong Ye-ji Reporter