South Korea Inflation Averages 2.5% in 2021

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By Kwanwoo Jun
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South Korea’s headline inflation averaged 2.5% in 2021 after remaining above the central bank’s annual 2.0% target for the ninth consecutive month in December.

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The benchmark consumer-price index rose 3.7% in December from a year earlier, unchanged from a decade’s high of the previous month, the Statistical Office said on Friday. The latest reading matches the average forecast for five economists surveyed by The Wall Street Journal.

Higher prices of agricultural and industrial products as well as utility services continued to add to inflationary pressures, even as temporary fuel tax cuts helped moderate price hikes in the country for the month.

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Compared to the previous month, the index rose 0.2% in December, a softer pace than the 0.4% increase in the previous month. The latest readings were in line with the median forecast.

The core CPI, which separates volatile energy and food prices, rose 2.2% a year ago, compared to November’s 1.9% gain. It rose 0.4% a month earlier, a faster pace than 0.1% in November.

The Bank of Korea has indicated it will tighten policy to curb inflation as it raised interest rates for the second time in November in 2021.

The bank expects inflation to average 2.0% in 2022, higher than its earlier estimate of 1.5%.

Write to Kwanwoo Jun at [email protected]

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