South Korea CPI inflation eases slightly in September

In September, South Korean consumer inflation showed a slight easing, according to data released by Statistics Korea. The Consumer Price Index (CPI) inflation increased by 2.9% year-on-year, a drop from the previous month's 3.1%. Despite this slight improvement, prices remained near two-year highs and well above the Bank of Korea's annual inflation target of 2%.

The CPI rose 0.3% month-on-month, falling short of the anticipated 0.4% increase. Core CPI, which excludes volatile food and energy costs, grew 2.8% year-on-year but declined 0.1% month-on-month. The decrease in overall CPI was primarily attributed to falling prices for agricultural goods and alcohol. However, services, gas, water, and fuel prices continued to increase, particularly due to the ongoing U.S.-Iran war, which kept oil prices elevated.

Despite this moderation, CPI inflation remained significantly higher than the Bank of Korea's target, potentially prompting the central bank to consider additional interest rate hikes to combat persistent inflation. The Bank of Korea has already raised rates twice this year by a combined 50 basis points and has signaled further rate hikes as it strives to cool down high inflation.