Bank of Korea: "February Inflation to Hover Around 2%... Closely Monitoring Oil Price and Exchange Rate Volatility"

Bank of Korea Holds Price Monitoring Meeting
January CPI Rises 2.0%
Driven by Falling Oil Prices and Slower Growth in Agricultural, Livestock, and Fisheries Products

The Bank of Korea analyzed that the consumer price index (CPI) rose by only 2.0% in January, marking the smallest increase in five months, attributing this to falling petroleum prices and a slowdown in the rise of agricultural, livestock, and fisheries product prices. While the central bank expects inflation to remain stable going forward, it also pointed out that recent heightened volatility in international oil prices and exchange rates could be variables.

Kim Woong, Deputy Governor of the Bank of Korea, made these remarks during a price monitoring meeting held at the Bank of Korea headquarters in Jung-gu, Seoul, on the morning of February 3.

The January CPI growth rate stood at 2.0%, down 0.3 percentage points from the previous month’s 2.3%. The sharp drop in the petroleum price growth rate—from 6.1% in December to 0.0% in January—driven by weaker international oil prices and a decline in the won-dollar exchange rate, was a key factor in lowering consumer prices. The increase in agricultural, livestock, and fisheries product prices also slowed, falling from 4.1% to 2.6%, as favorable weather conditions led to increased shipments of major agricultural products.

While core goods prices, particularly durable goods, saw a slight increase, service prices remained at the previous month's level of 2.3%. As a result, the core inflation rate, which excludes food and energy, remained unchanged at 2.0%.

The perceived inflation rate for daily necessities (covering 144 items with high purchase frequency and expenditure weight within the CPI) recorded a 2.2% increase, a significant drop of 0.6 percentage points from 2.8% in December.

The Bank of Korea also forecast that inflation would remain stable in February. Deputy Governor Kim explained, "In February, upward factors such as planned price hikes for certain items like electronic devices, and downward factors such as lower oil prices compared to last year, are expected to offset each other, resulting in inflation hovering near the 2% target."

He added, "Although inflation is generally expected to remain stable in the future, we will closely monitor the situation as volatility in international oil prices and exchange rates has recently increased significantly. We plan to announce the inflation outlook at the time of the February economic forecast."

Yonhap News

This content was produced with the assistance of AI translation services.