Pedestrians walk past food stalls and shops in the Myeongdong shopping district in Seoul on March 26, 2024.
Anthony Wallace | AFP | Getty Images
South Korea’s inflation rate rose to 1.5% in November from a 45-month low in October due to a weak won and slowing exports.
The figure was higher than October’s 1.3% inflation reading and lower than the 1.7% expected by economists polled by Reuters.
Last Thursday, the Bank of Korea unexpectedly cut interest rates by 25 basis points to 3%. This was the first time since 2009 that the Bank of Korea cut interest rates twice in a row.
The Bank of Korea said in a statement that the interest rate cut was to “mitigate downside risks to the economy.” According to the bank’s advance estimate, South Korea narrowly avoided a technical recession in the third quarter, with GDP growing 0.1% quarter-on-quarter after contracting 0.2% in the second quarter.
On inflation, the Bank of Korea said in a statement that prices have stabilized and are expected to remain stable due to lower global oil prices and weakening demand pressure.
The Bank of Korea also lowered its overall inflation forecast for 2024 and 2025 to 2.3% and 1.9% respectively from the previous 2.5% and 2.1%.
“The path of inflation going forward is likely to be affected by changes in exchange rates and global oil prices, domestic and foreign economic growth, and adjustments to utility bills,” the bank added.
South Korea’s currency weakened in October and November, hitting a two-year high of 1,411.31 against the U.S. dollar on concerns about tariffs from the incoming Trump administration. Data comes from World Integrated Trade Solutions Platform Established by the World Bank, it ranks the United States as South Korea’s second largest trading partner.
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