SEOUL: South Korea’s headline inflation for April is expected to have accelerated slightly to 1.1% y/y from March’s 1%, according to Societe Generale. Meanwhile, the country’s inflation on a month-on-month basis has likely accelerated to 0.2% in April from -0.3% in March.
A moderate recovery is expected to have been observed in energy prices because of increase in crude oil prices, while fresh food prices are expected to be stable due to the seasonal patterns, noted Societe Generale. Public service prices and utility fares are also expected to have remained stable. Core inflation is likely to have recovered to 1.8% in April from March’s 1.7%. For some time, both core inflation and headline inflation are expected to continue at around the current level.
Meanwhile, it is unlikely that the Bank of Korea will lower its policy rates further due to the deviation in the inflation target, added Societe Generale. The central bank’s near-term policy outlook is expected to be dependent on data that determines if the interest rate should be lowered.
