| Consensus | Consensus Range | Actual | Previous | |
| CPI - M/M | 0.4% | 0.3% to 0.5% | 0.3% | 0.2% |
| CPI - Y/Y | 3.0% | 2.8% to 3.3% | 2.9% | 3.1% |
| Core CPI - M/M | -0.1% | 0.2% | ||
| Core CPI - Y/Y | 2.8% | 3.4% |
Highlights
South Korea's headline consumer price index rose 2.9 percent on the year in September, moderating from an increase of 3.1 percent in August. The index rose 0.3 percent on the month after a previous increase of 0.2 percent. Food prices rose 1.0 percent on the year after falling 0.5 percent previously.
Core CPI, excluding food and energy, fell 0.1 on the month after a previous increase of 0.2 percent, with the year-over-year increase slowing from 3.4 percent to 2.8 percent. This drop in core inflation was largely driven by communication prices, which rose 2.0 percent on the year in September after surging 16.6 percent in August. Most other categories rose at a similar pace in September as they did in August.
At their latest policy meeting in August, officials at the Bank of Korea raised policy rates for the second time in a row, noting that they expect inflation to remain above their two percent target"for a considerable time". Officials also advised that further rate hikes are likely in coming months, and today's data will likely reinforce their assessment that additional policy tightening is required to get inflation back to target.
Market Consensus Before Announcement
CPI seen up at 0.4 percent on month and 3.0 percent on year.
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.