Korea's inflation hits lowest level in almost a year in February

People walk past a display that shows food prices at a restaurant in central Seoul on Monday. [YONHAP]

Inflation in Korea recorded its lowest level in almost a year in February.

Inflation was 4.8 percent last month, compared to 5.2 percent in January, according to Statistics Korea on Monday.

On month, the Consumer Price Index (CPI) increased 0.3 percent.

Prices for electricity, gas and water soared 28.4 percent on year in February, up from 28.3 percent in January. The figure was the highest since the government began compiling the relevant data in 2010.

Slower price growth for livestock and petroleum prices contributed to Friday's lower inflation, said the Bank of Korea on the same day.

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Price for agricultural, livestock and fishery products inched up 1.1 percent on year, while those for industrial products, including gasoline and diesel, were up 5.1 percent in the same period.

The price of Dubai crude oil was $81.2 in February, compared to $90.6 last October.

Core inflation, which excludes food and energy sectors, was 4.0 percent on year, down from 4.1 percent a month prior.

“The government will do its utmost to accelerate the price slowdown as the public struggles from continued high prices,” said Finance Minister Choo Kyung-ho in a meeting in central Seoul on Monday. “Uncertainties remain in certain sectors, but a deceleration in prices will become clearer if there aren’t external shocks” that newly arise.

Inflation is projected to decline in March.

“The growth in consumer prices will likely fall considerably due to the base effects of the surge in international oil price in March last year,” said the Bank of Korea in a statement.

The price of petroleum increased 13.8 percent on month in March 2022.

Consumer prices will likely exceed the target level of 2 percent throughout this year, though the pace is expected to slow.

However, uncertainties in taming inflation remain high due to a number of factors, including trends in global oil prices, the global economy and rising public utility fees, added the central bank.

Inflation expectations over the next year was 4.0 percent in February due to rising public utility fees. The figure was up from 3.9 percent a month earlier.

Inflation was just 3.7 percent in February of last year but peaked at 6.3 percent last July.

The figure started to decrease in August but stayed above 5 percent through January.

Despite continued inflation concerns, the Bank of Korea’s Monetary Policy Board kept the base rate unchanged at 3.50 percent at its latest meeting in February.

The move was widely expected from the central bank, which has remained hawkish for a year and a half.

However, Bank of Korea governor Rhee Chang-yong last month called for monetary policy to focus on stabilizing inflation this year.

“It’s difficult to predict how rapidly prices will slow in the future depending on China’s reopening and the war in Ukraine," said the central banker before the National Assembly in February.

“The future recovery of China’s economy and the IT sector, along with the weak domestic property market, are making it more difficult to predict the flow of the future economy.”

March inflation will be announced on April 4.

BY JIN MIN-JI [jin.minji@joongang.co.kr]