South Korea's September Inflation Exceeds Expectations

South Korea experienced a faster-than-expected acceleration in headline inflation during September. According to the country's statistics office, the benchmark consumer-price index increased by 3.7% compared to the same period last year, surpassing the previous month's growth rate of 3.4%. This outperformed the median market forecast of 3.4% for September, further distancing inflation from the central bank's annual target of 2.0%.

Despite temporary fluctuations in the near future, the Bank of Korea anticipates inflation to stabilize towards the end of 2023, as indicated in its latest August forecast. The central bank projects an average inflation rate of 3.5% in 2023, which is expected to moderate to 2.4% in 2024.

In terms of monthly changes, the consumer-price index rose by 0.6% in September, following a 1.0% increase in August.

Meanwhile, core CPI, which excludes volatile food and energy prices, witnessed a year-on-year increase of 3.3% in September, while experiencing a 0.1% decline compared to the previous month. These figures show a slight slowdown from the gains of 3.3% and 0.3%, respectively, observed in August.