South Korea inflation in December eases for second month

SEOUL (Reuters) -South Korea’s annual consumer inflation eased for a second month in December and came in below market expectations, backing policymakers’ outlook that price pressure will gradually ease through 2024.

The December consumer price index (CPI) gained 3.2% from a year earlier, compared with a rise of 3.3% in November, and was weaker than a median 3.3% rise tipped in a Reuters survey.

The index flatlined on a monthly basis.

Friday’s inflation data supports the Bank of Korea’s view on the near-term inflation path, which is that price pressure will gradually ease to near the bank’s target level of 2% towards the end of next year as policymakers gear up to a pivot to monetary policy easing.

For the 2023 full year, consumer inflation eased to 3.6% from 5.1% in 2022.

Most economists see the BOK as having reached its peak rate and expect it to start easing policy from the third quarter of next year as cooling inflation makes a restrictive policy rate at 3.50% difficult to justify to the public.

A breakdown of the data showed prices of fresh food items surged 14.5% year-on-year in December but prices of industrial goods rose 2.1% year-on-year, slowing from 2.5% in November.

(Reporting by Cynthia Kim in SeoulEditing by Matthew Lewis)