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Korea's inflation slows to four-year low of 2.3% in 2024

Published: 31 Dec. 2024, 08:46 Updated: 31 Dec. 2024, 18:57

SHIN HA-NEE
[email protected]

A customer shops for vegetables at a discount mart in Seoul on Dec. 31. [NEWS1]

Korea’s annual headline inflation for 2024 slowed to a four-year low of 2.3 percent, data showed Tuesday.

The latest annual figure marks a significant moderation from a 5.1 percent jump in 2022 and a 3.6 percent increase in 2023.

According to Statistics Korea, the consumer price index, a key measure of inflation, rose 2.3 percent in 2024, the softest pace of growth since 2020, when headline inflation stood at 0.5 percent.

The December reading rose 1.9 percent on year, following the previous month’s 1.5 percent gain. Despite the 0.4 percent point acceleration, inflation stayed below the 2 percent threshold for a fourth consecutive month.

The Bank of Korea (BOK) attributed the latest uptick in December to a base effect from the fuel price decline in the previous year, while an increase in the won-dollar exchange rate since November is responsible for 0.05 to 0.1 percentage points of inflation growth, according to the central bank’s estimation.

The weak won, which reached a 15-year low level by the end of December, may further stimulate inflation in January, but a base effect from the previous year’s agricultural product and fuel prices as well as low demand pressure would mitigate the increase, the BOK said.

“As uncertainties involving currency movements, a contraction in consumer sentiment and utility rate hikes have increased, we will closely monitor the consumer price situation moving forward,” said BOK Deputy Gov. Kim Woong during an inflation-monitoring meeting held at the central bank on Tuesday.

Core inflation, which excludes volatile food and energy prices, came in at 2.2 percent for the year.

The cost of living index, which tracks price changes for 144 frequently purchased consumer goods and services, rose 2.7 percent.

Prices of fresh food products jumped sharply by 9.8 percent on year, the steepest growth since 2010, when the figure came at 21.3 percent. Fresh fruit prices took a surge in 2024 due to the previous year’s reduced yields and extreme weather conditions during summer.

Updated, Dec. 31: Added comments from the Bank of Korea.

BY SHIN HA-NEE [[email protected]]