Pedestrians walk past food stalls and shops in the Myeongdong shopping district of Seoul on March 26, 2024.
Anthony Wallace | AFP | Getty Images
South Korea’s inflation rate climbed in November to 1.5% year on year, from a 45-month low in October, as the country grapples with a weakening Korean won and slowing exports.
The figure was higher than October’s inflation reading of 1.3%, and lower than the 1.7% expected by economists polled by Reuters.
Last Thursday, South Korea’s central bank unexpectedly cut rates by 25 basis points to 3%, marking the first time that the Bank of Korea had enacted two back-to-back cuts since 2009.
The BOK said in a statement that the cut was to “mitigate downside risks to the economy.” South Korea narrowly avoided a technical recession in the third quarter, with GDP growing 0.1% quarter on quarter, according to the bank’s advance estimates, following a contraction of 0.2% in the second quarter.
On inflation, the BOK said in its statement that prices had stabilized, and is expected to remain stable due to declining global oil prices and subdued demand pressure.
The BOK’s also lowered its headline inflation outlook for 2024 and 2025 to 2.3% and 1.9%, respectively, down from its previous forecasts of 2.5% and 2.1%.
“The future path of inflation is likely to be affected by movements in exchange rates and global oil prices, by economic growth at home and abroad, and by adjustments in public utility fees,” the bank added.
South Korea’s currency has weakened against the greenback over October and November, hitting a two-year high of 1,411.31 as tariff fears from the incoming Trump administration take hold. Data from the World Integrated Trade Solution platform — set up by the World Bank — lists the U.S. as South Korea’s second largest trade partner.