South Korea inflation softens to one-year low, outlook murky By Reuters

© Reuters. FILE PHOTO: An workplace employee eats his lunch at a comfort retailer in Seoul, South Korea, June 24, 2022. REUTERS/ Heo Ran

By Jihoon Lee

SEOUL (Reuters) – South Korea’s client inflation eased to a one-year low in March, led by weaker oil costs, however a spread of points together with worries about international progress, financial coverage and choices by main oil producers have clouded the outlook.

The patron value index was 4.2% greater in March than a 12 months earlier, in contrast with positive factors of 4.8% in February and a 4.3% forecast in a Reuters survey. It was the slowest annual rise since March 2022.

The index rose 0.2% on a month-to-month foundation, after a 0.3% acquire within the earlier month, in accordance with the Statistics Korea. It matched economists’ expectation for a 0.2% rise.

The softening comes as worries in regards to the international banking sector and native financial prospects have prompted traders to extend their bets that the South Korean central financial institution’s tightening cycle is over.

The Financial institution of Korea (BOK) mentioned after the information launch that inflation is prone to ease additional, however stay greater than the central financial institution’s 2% goal all year long, whereas core inflation would cool at a slower tempo.

The BOK mentioned there was heightened uncertainty over international vitality costs, world and home financial traits, and public value will increase.

Saudi Arabia and different OPEC+ oil producers on Sunday introduced additional oil output cuts of round 1.16 million barrels per day, catching markets offguard and sharply lifting costs.

“It’s undoubtedly a variable, which can trigger downward rigidity in oil costs,” mentioned economist Oh Chang-sob at Hyundai Motor Securities.

General, slowing international progress, a delay in public utility value will increase and the shock weekend choice by OPEC+ to chop oil manufacturing have added to broader uncertainty across the economic system and inflation.

A breakdown of the Tuesday’s information confirmed costs of petroleum merchandise had been 14.2% decrease in March than a 12 months earlier than, contributing to the slower inflation. Livestock merchandise additionally fell 1.5%.

The information comes per week earlier than the April 11 coverage assembly of the Financial institution of Korea, whose pause in late February after a 12 months of successive rate of interest hikes was broadly taken as suggesting the top of its tightening cycle.

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