| Consensus | Consensus Range | Actual | Previous | |
| CPI - M/M | 0.3% | 0.3% to 0.3% | 0.2% | 0.3% |
| CPI - Y/Y | 2.9% | 2.8% to 2.9% | 2.8% | 2.9% |
| Core CPI - M/M | 0.4% | -0.1% | ||
| Core CPI - Y/Y | 2.8% | 2.8% |
Highlights
South Korea's headline consumer price index rose 2.8 percent on the year in October, easing from an increase of 2.9 percent in September. The index rose 0.2 percent on the month after a previous increase of 0.3 percent. Food prices rose 0.5 percent on the year after increasing 1.0 percent previously.
Core CPI, excluding food and energy, rose 0.4 on the month after a previous fall of 0.1 percent, with the year-over-year increase unchanged at 2.8 percent. Steady core inflation reflects offsetting moves in key components, with communication prices rising at a faster pace but clothing and footwear prices recording a smaller increase. Transport costs also increased at a slower pace,.
At their latest policy meeting mid-October, officials at the Bank of Korea left policy rates on hold after increasing rates in each of their previous two meetings. Nevertheless advised that they expect inflation to remain above their two percent target"for a considerable time" and indicated that further rate hikes are likely in coming months. Today's data will likely reinforce their assessment that additional policy tightening will be required to get inflation back to target.
Market Consensus Before Announcement
Forecasters see CPI up 0.3 percent on the month and 2.9 percent on year in October, same as in September.
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.