| Actual | Previous | |
|---|---|---|
| CPI - M/M | 0.1% | 0.2% |
| CPI - Y/Y | 2.1% | 2.1% |
| Core CPI - M/M | 0.4% | 0.2% |
| Core CPI - Y/Y | 2.1% | 1.9% |
Highlights
South Korea's headline consumer price index rose 2.1 percent on the year in April, unchanged from March. The index rose 0.1 percent on the month after increasing 0.2 percent previously.
Underlying inflation picked up slightly in April. Core CPI, excluding food and energy, rose 0.4 percent on the month after a previous increase of 0.2 percent, with the year-over-year increase increasing from 1.9 percent to 2.1 percent. This is the highest level of core inflation since last April.
Higher core inflation reflects stronger price increases for furniture, clothing, restaurants and hotels, and miscellaneous good and services.Transport costs fell 0.4 percent on the year in April after increasing 1.5 percent in March, while the year-over-year increase in housing, utilities & fuel costs eased slightly from 1.9 percent to 1.8 percent. Food price inflation accelerated from 2.4 percent to 3.0 percent.
At its most recent meeting, held mid-April, the Bank of Korea left its main policy rate on hold at 2.75 percent, in line with the consensus forecast. In the statement accompanying that decision, officials expressed confidence that inflation will remain stable and close to their target level. Officials noted, however, that uncertainty about the outlook has increased, largely reflecting global trade tensions. In particular, they noted that heightened exchange rate volatility could have an impact on domestic inflation and financial stability. The next meeting is scheduled for the end of May.
Underlying inflation picked up slightly in April. Core CPI, excluding food and energy, rose 0.4 percent on the month after a previous increase of 0.2 percent, with the year-over-year increase increasing from 1.9 percent to 2.1 percent. This is the highest level of core inflation since last April.
Higher core inflation reflects stronger price increases for furniture, clothing, restaurants and hotels, and miscellaneous good and services.Transport costs fell 0.4 percent on the year in April after increasing 1.5 percent in March, while the year-over-year increase in housing, utilities & fuel costs eased slightly from 1.9 percent to 1.8 percent. Food price inflation accelerated from 2.4 percent to 3.0 percent.
At its most recent meeting, held mid-April, the Bank of Korea left its main policy rate on hold at 2.75 percent, in line with the consensus forecast. In the statement accompanying that decision, officials expressed confidence that inflation will remain stable and close to their target level. Officials noted, however, that uncertainty about the outlook has increased, largely reflecting global trade tensions. In particular, they noted that heightened exchange rate volatility could have an impact on domestic inflation and financial stability. The next meeting is scheduled for the end of May.
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.
