| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| CPI - M/M | 0.5% | 0.4% to 0.5% | 0.7% | 0.4% |
| CPI - Y/Y | 2.0% | 2.0% to 2.2% | 2.2% | 1.9% |
| Core CPI - M/M | 0.5% | 0.1% | ||
| Core CPI - Y/Y | 1.9% | 1.8% |
Highlights
South Korea's headline consumer price index rose 2.2 percent on the year in January, up from an increase of 1.9 percent in December. The index rose 0.7 percent on the month after increasing 0.4 percent previously.
Underlying inflation also picked up slightly in January but remains subdued. Core CPI, excluding food and energy, rose 0.5 percent on the month after a previous increase of 0.1 percent, with the year-over-year increase increasing from 1.8 percent to 1.9 percent.
Higher headline inflation was largely driven by transport costs, up 3.3 percent on the year in January after an increase of 1.3 percent in December. Food price inflation moderated from 2.5 percent to 2.4 percent, while the year-over-year increase in housing, utilities & fuel costs increased slightly from 1.7 percent to 1.8 percent. Recreation and culture prices grew at a stronger pace, offset by a smaller increase in health costs.
At the BoK's most recent policy meeting, held last month, officials left the main policy rate unchanged at 3.00 percent. Officials expressed confidence that inflation will remain stable but are concerned about the growth outlook, signalling that further cuts will be considered in coming months to help mitigate downside risk to growth.
Underlying inflation also picked up slightly in January but remains subdued. Core CPI, excluding food and energy, rose 0.5 percent on the month after a previous increase of 0.1 percent, with the year-over-year increase increasing from 1.8 percent to 1.9 percent.
Higher headline inflation was largely driven by transport costs, up 3.3 percent on the year in January after an increase of 1.3 percent in December. Food price inflation moderated from 2.5 percent to 2.4 percent, while the year-over-year increase in housing, utilities & fuel costs increased slightly from 1.7 percent to 1.8 percent. Recreation and culture prices grew at a stronger pace, offset by a smaller increase in health costs.
At the BoK's most recent policy meeting, held last month, officials left the main policy rate unchanged at 3.00 percent. Officials expressed confidence that inflation will remain stable but are concerned about the growth outlook, signalling that further cuts will be considered in coming months to help mitigate downside risk to growth.
Market Consensus Before Announcement
The consensus looks for headline CPI up 0.5 percent on the month and 2.0 percent on the year in January after gains of 0.4 percent and 1.9 percent, respectively, in December.
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.
