BOK expects inflation to remain in upper 2% range in November

The Bank of Korea (BOK) expects consumer price inflation to remain in the upper 2 percent range in November, citing persistently high core inflation.

“Given the elevated pace of core inflation, consumer price growth is expected to remain in the upper 2 percent range in November,” said Lee Ji-ho, deputy governor of the BOK, on Tuesday.

Lee made the remarks while chairing a meeting to assess inflation conditions at the BOK, adding that November inflation would also be affected by movements in international oil prices.

Consumer prices rose at a slightly slower pace in October than in September, as improved supply conditions for agricultural, livestock, and fisheries products helped ease price pressures. However, prices continued to climb sharply, particularly for personal services and durable goods, Lee said.

Core inflation remained elevated as accumulated cost pressures filtered through to prices, particularly in travel, dining-out services, and electronic products, he added.

“Consumer prices are likely to continue rising at a relatively high rate amid persistent uncertainty surrounding the situation in the Middle East, the pass-through of cost shocks, and mounting demand-side pressures,” Lee said, adding that the BOK will closely monitor price developments.”

The Ministry of Data and Statistics, in the meantime, announced Tuesday that the consumer price index stood at 120.73 in October, based on 2020 as 100, up 2.8 percent from a year earlier.

The BOK has recently been paying close attention to the pace of core inflation. Its assessment of underlying price pressures is expected to be a key consideration at its next monetary policy meeting scheduled for November 26.

At an inflation review meeting on October 2, Lee had forecast that consumer price growth would remain elevated at around 3 percent in October.

Although inflation eased from 3.1 percent in August to 2.9 percent in September, he said the underlying pace of price increases had actually accelerated when the base effect from SK telecom Co.’s mobile phone fee reductions was taken into account.