South Korea Feb Inflation Accelerates to Over 1-Year High

Korea
FILE PHOTO: A couple wearing masks walk in a shopping district amid the coronavirus disease (COVID-19) pandemic in Seoul, South Korea, January 4, 2021. REUTERS/Kim Hong-Ji

SEOUL ⸺ South Korea’s consumer inflation accelerated to a 13-month high in February on improving domestic demand and rising global oil prices, official data showed on Thursday, further signalling a gradual recovery in Asia’s fourth-largest economy.

The consumer price index (CPI) rose 1.1% year-on-year in February, Statistics Korea said, the fastest since a 1.5% rise in January 2020 and beating a median 1.0% increase tipped in a Reuters poll.

The index rose 0.6% in January.

“Going forward, there are more upside factors for inflation … Despite the resurgence in coronavirus, the (South Korean) economy is generally seen recovering. There will be an increase in demand, which will add upward pressure on inflation,” a Statistics Korea official told reporters.

Data showed the cost of fresh food surged 18.9% from a year earlier, due to the nation’s Lunar New Year holidays and as the impact of heavy snowfalls in January and cold weather weighed on crop production.

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Housing rents also grew 0.9%, the sharpest increase in nearly three years, the official added.

Month-on-month inflation was 0.5%, versus a 0.8% rise in January, but still faster than the poll’s prediction of a 0.4% increase.

Last week, the Bank of Korea raised this year’s inflation outlook to 1.3% from 1.0% previously, while keeping the policy interest rate unchanged at a record low of 0.50%.

Reporting by Joori Roh; Editing by Richard Pullin; Reuters

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