By Jihoon Lee
SEOUL- South Korea’s consumer inflation slowed in August to the weakest in nearly 3-1/2 years, official data showed on Tuesday, supporting market expectations for an easing of monetary policy as early as next month.
The consumer price index (CPI) rose 2.0 percent from a year earlier, after gaining 2.6 percent the previous month, marking the slowest annual rise since March 2021.
It matched the median 2.0 percent increase tipped in a Reuters survey of economists and the central bank’s medium-term inflation target of 2 percent.
“Going forward, unless there is any additional shock from weather conditions or global oil prices, consumer inflation is expected to stabilize in the lower 2 percent range,” said Vice Finance Minister Kim Beom-seok.
Last month, the Bank of Korea held interest rates steady at their highest in nearly 16 years but revived expectations for a policy easing that some economists see happening as soon as October as growth concerns overshadow inflation worries.
The central bank said Tuesday’s data showed inflation was stabilizing more quickly than in other major economies and it expected prices to maintain a stable trend.
“The data supports a rate cut in October, which is seen most likely for now, although it is still not a sure thing due to growing household debt,” said Ahn Jae-kyun, a fixed-income analyst at Shinhan Securities.
South Korea’s treasury bond yields traded slightly down on Tuesday after three straight sessions of gains.
On a monthly basis, CPI was up 0.4 percent , the fastest in six months, after rising 0.3 percent the prior month and beating a forecast by economists for 0.3 percent .
Core CPI, excluding volatile food and energy items, rose 2.1 percent from a year earlier, slowing from the previous month’s 2.2 percent rise and marking the weakest since November 2021.
