South Korea's headline consumer price index rose 1.3 percent on the year in October after an increase of 1.6 percent in September, below the Bank of Korea's 2.0 percent target. The index was unchanged on the month after advancing 0.1 percent previously. The fall in headline inflation was largely driven by transport prices. These fell 1.2 percent on the month after a fall of 2.0 percent previously and fell 4.0 percent on the year after a previous fall of 1.2 percent. Food price inflation also moderated from 1.8 percent to 1.4 percent.

Underlying price pressures also eased in October. Core CPI, excluding food and energy, rose 1.8 percent on the year, down slightly from the 2.0 percent increase recorded in September, and rose 0.2 percent on the month after a previous fall of 0.2 percent. The year-over-year increase in prices was relatively steady for most major categories of spending.

At their most recent meeting last month, officials at the BoK lowered the main policy rate by 25 basis points from 3.50 percent to 3.25 percent. In the statement accompanying that decision, officials retained their forecast for core inflation to average 2.2 percent this year and 2.0 percent in 2025 but noted uncertainties about the outlook. They also indicated that further rate cuts will be considered in upcoming meetings.

Consumer price inflation remains muted with CPI expected to show a 0.3 percent rise in October from September while the CPI is expected up 1.4 percent on year after September's 1.6 percent increase.

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.

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.