| Consensus | Actual | Previous | |
|---|---|---|---|
| CPI - M/M | 0.3% | 0.1% | 0.5% |
| CPI - Y/Y | 3.0% | 3.1% | 3.1% |
| Core CPI - M/M | 0.1% | 0.3% | |
| Core CPI - Y/Y | 2.4% | 2.5% |
Highlights
South Korea's headline consumer price index rose 3.1 percent on the year in March, as it did in February, holding above to the Bank of Korea's 2.0 percent target. The index was rose 0.1 on the month after advancing 0.5 percent previously.
Underlying price pressures also moderated slightly in March. Core CPI, excluding food and energy, rose 2.4 percent on the year, easing from an increase of 2.5 percent previously, and advanced 0.1 percent on the month after a previous increase of 0.3 percent. The year-over-year change in prices was relatively stable for most categories of spending.
At its most recent policy meeting, held mid-February, the BoK left policy rates on hold. Officials noted then that higher agricultural prices will likely push up headline inflation in the near-term and that"there are high uncertainties around the inflation outlook". Today's data showing higher headline inflation and steady underlying inflation will likely reinforce officials' view that policy settings will need to remain restrictive in upcoming meetings.
Underlying price pressures also moderated slightly in March. Core CPI, excluding food and energy, rose 2.4 percent on the year, easing from an increase of 2.5 percent previously, and advanced 0.1 percent on the month after a previous increase of 0.3 percent. The year-over-year change in prices was relatively stable for most categories of spending.
At its most recent policy meeting, held mid-February, the BoK left policy rates on hold. Officials noted then that higher agricultural prices will likely push up headline inflation in the near-term and that"there are high uncertainties around the inflation outlook". Today's data showing higher headline inflation and steady underlying inflation will likely reinforce officials' view that policy settings will need to remain restrictive in upcoming meetings.
Market Consensus Before Announcement
Consumer prices in March, which in February rose to 3.1 percent from January's 2.8 percent, are expected to edge lower to 3.0 percent.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Annual changes in the CPI represent the rate of inflation.
Description
An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from mortgages and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
Inflation (along with various risks) basically explains how interest rates are set on everything from mortgages and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
