Korea’s inflation easing though concerns about FX volatility still linger
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South Korea’s consumer inflation has slowed to a level matching the central bank’s target, driven by declining fuel costs and comparisons with last year’s higher prices. Following this finding, analysts conducted research and discovered that consumer prices in January surged by 2% compared to the same month last year. Moreover, they revealed that this percentage reflects a decline from the 2.3% record set in December, citing data from the Ministry of Data and Statistics retrieved on Tuesday, February 3. A report from a reliable source highlighted that this figure is consistent with what economists surveyed had forecasted. In the meantime, analysts noted that the Lunar New Year holidays in January 2025 raised prices and set a challenging benchmark for future comparisons. This year, such holidays are in February. On the other hand, reports disclosed that core inflation, which excludes volatile energy and food prices, also rose steadily by 2%, similar to the previous month. As a result, both consumer inflation and core inflation are currently at the Bank of Korea’s 2% target. Apart from this, sources mentioned that this downward trend in inflation reinforces recent signals from the Bank of Korea (BOK). The Korean won remains underperforming within the Asian region The central bank decided to keep its benchmark interest rate unchanged at 2.5% in January. It also omitted any suggestions of potential further cuts, proposing that the bank’s officials might consider maintaining their rate steady for an extended period. Following this move, Jeeho Yoon, a senior economist at BNP Paribas, commented that, “The increase in services inflation was normal for this time of year, while commodity prices remained stable due to steady food and oil product costs.” Looking ahead, Yoon forecasts an increase in the annual headline Consumer Price Index (CPI) of 2.1% in 2026, with upward pressure on…
Filed under: News - @ February 3, 2026 4:24 am