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South Korean CPI inflation eases to 1.6% y/y in September on falling transport prices
Core CPI rises by 1.8% y/y compared to 1.9% y/y in August
Fresh food prices stabilize at low 3% y/y growth
CPI print increases odds that BOK will ease in October meeting
CPI inflation eased to 1.6% y/y in September from 2.0% y/y in August, falling below the 2% central bank target for the first time since March 2021, according to data released by the stat office Kostat. The headline inflation print came below expectations of economists polled by Bloomberg who expected only a slight disinflation to 1.9% y/y in September. In m/m terms, CPI rose by 0.1% m/m compared to 0.4% m/m in August.
The main reason for weaker inflation print were transport prices which fell by 1.2% y/y in September compared to 1.8% y/y increase in August. At the same time, fresh food prices, which were the main driver of inflation in previous months, rose by 3.4% y/y as fresh vegetable prices rose by 11.6% y/y and fresh fruit prices were down by 2.9% y/y. It should be noted that fresh food prices were affected from a high base related to fruit prices as the former surged by 25.8% y/y in Sep 2023, however, this was more or less offset by the increase in vegetable prices.