Bank of Korea holds price situation review meeting

'Underlying upward trend has expanded when base effect is stripped out'

Bank of Korea Deputy Governor Lee Ji-ho speaks at an economic outlook briefing in August. [Bank of Korea]
Bank of Korea Deputy Governor Lee Ji-ho speaks at an economic outlook briefing in August. [Bank of Korea]

Bank of Korea Deputy Governor Lee Ji-ho said Friday that October consumer inflation is expected to remain at an elevated level of around 3 percent as upward pressure on core items continues.

Lee made the remarks at a price situation review meeting held Friday morning on the 16th floor of the central bank's headquarters, saying that while consumer, core and lifestyle inflation all fell in September compared with the previous month, "the underlying upward trend has expanded somewhat when you account for the dissipation of the temporary base effect from the prior month."

September consumer inflation, announced that day, came in at 2.9 percent — down 0.2 percentage points from the previous month's 3.1 percent — as a base effect stemming from telecom fee discounts faded.

The rate of increase in petroleum product prices held at 14.8 percent, broadly in line with the prior month's 14.2 percent, as a price ceiling remained in place despite rising global oil prices driven by renewed tensions in the Middle East. The decline in agricultural, livestock and fishery prices narrowed from 2.6 percent to 0.3 percent, reflecting poor harvests for some vegetables.

Core inflation, which excludes highly volatile items, eased to 2.8 percent from the previous month's 3.4 percent, also reflecting the dissipation of the telecom fee base effect.

Lee said that in September, personal service prices — led by airfares and travel costs — continued to rise sharply within core items as cost pressures passed through to consumers, while prices of durable goods such as electronics also accelerated on the back of higher semiconductor prices.

"Going forward, consumer prices are expected to maintain a high rate of increase centered on core inflation, driven by the pass-through of cost shocks and expanding demand-side pressures, all amid still-elevated uncertainty surrounding the war in the Middle East," Lee said. "We will monitor the price situation with heightened vigilance."


kimstar@heraldcorp.com