{"id":2201584,"date":"2023-07-05T08:00:53","date_gmt":"2023-07-04T23:00:53","guid":{"rendered":"https:\/\/koreapro.org\/?p=2201584"},"modified":"2023-07-04T17:04:28","modified_gmt":"2023-07-04T08:04:28","slug":"south-koreas-inflation-dips-below-3-for-the-first-time-in-two-years","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/07\/south-koreas-inflation-dips-below-3-for-the-first-time-in-two-years\/","title":{"rendered":"South Korea\u2019s inflation dips below 3% for the first time in two years"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">South Korea\u2019s consumer price growth fell below 3% for the first time in nearly two years, marking the fifth consecutive month of deceleration, according to a Statistics Korea <\/span><a href=\"https:\/\/kostat.go.kr\/board.es?mid=a10301010000&amp;bid=213&amp;list_no=426199&amp;act=view&amp;mainXml=Y\"><span style=\"font-weight: 400;\">report<\/span><\/a><span style=\"font-weight: 400;\">. The drop to a 2.7% year-on-year increase in June from a 3.3% rise in May reflects <\/span><a href=\"https:\/\/www.reuters.com\/markets\/commodities\/oil-prices-slip-global-economic-slowdown-fears-2023-07-03\/\"><span style=\"font-weight: 400;\">declining fuel costs<\/span><\/a><span style=\"font-weight: 400;\"> and a <\/span><a href=\"https:\/\/www.theinvestor.co.kr\/view.php?ud=20230703000127\"><span style=\"font-weight: 400;\">slower service sector growth rate<\/span><\/a><span style=\"font-weight: 400;\">. Inflation stayed above 2% \u2014 the central bank\u2019s inflation target over the medium term \u2014 for the 27th straight month in June.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The central bank has kept the benchmark interest rate steady at <\/span><a href=\"https:\/\/www.bok.or.kr\/eng\/bbs\/E0000627\/view.do?nttId=10077537&amp;menuNo=400022&amp;pageIndex=1\"><span style=\"font-weight: 400;\">3.5%<\/span><\/a><span style=\"font-weight: 400;\"> due to reduced inflationary pressure and increasing concerns about an economic slowdown. The ministry <\/span><a href=\"https:\/\/www.moef.go.kr\/nw\/nes\/detailNesDtaView.do;jsessionid=3azQS-CTih4eoxHFjar4MJ+F.node60?searchBbsId1=MOSFBBS_000000000028&amp;searchNttId1=MOSF_000000000064754&amp;menuNo=4010100\"><span style=\"font-weight: 400;\">pledged<\/span><\/a><span style=\"font-weight: 400;\"> to maintain price stability and closely monitor supply, prices, and weather conditions. The ministry also noted that among the 38 Organization for Economic Co-operation and Development (OECD) nations, only seven countries, including South Korea, have reported inflation rates below 3%.<\/span><\/p>\n<p><b>Why It Matters<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Decelerating inflation rates in South Korea indicate enhanced purchasing power for consumers, potentially stimulating increased consumer spending. This downturn also validates the decision by Bank of Korea\u2019s Governor Rhee Chang-yong to keep interest rates steady at 3.5%, suggesting there is less urgency for the central bank to raise interest rates. Consequently, borrowing costs for individuals and businesses might remain stable for a more extended period.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Nevertheless, several factors could alter this scenario. For instance, South Korea\u2019s recently commenced <\/span><a href=\"https:\/\/en.yna.co.kr\/view\/AEN20230703005300315?section=search\"><span style=\"font-weight: 400;\">rainy season<\/span><\/a><span style=\"font-weight: 400;\"> may influence agricultural yield, thus impacting food prices. Additionally, Saudi Arabia and Russia, the world\u2019s leading oil exporters, <\/span><a href=\"https:\/\/www.reuters.com\/business\/energy\/saudi-arabia-will-extend-voluntary-cut-1-million-bpd-august-spa-2023-07-03\/\"><span style=\"font-weight: 400;\">deepened oil cuts<\/span><\/a><span style=\"font-weight: 400;\"> on Monday, pushing prices upwards. Given that South Korea relies heavily on imports for <\/span><a href=\"https:\/\/www.mofa.go.kr\/eng\/wpge\/m_5657\/contents.do\"><span style=\"font-weight: 400;\">nearly 95%<\/span><\/a><span style=\"font-weight: 400;\"> of its energy and natural resources consumption, rising oil prices could potentially intensify inflation rates. The potential for aggressive interest rate increases in the U.S., as <\/span><a href=\"https:\/\/www.cnbc.com\/2023\/06\/28\/powell-say-more-restriction-is-coming-including-possibility-of-hikes-at-consecutive-meetings.html\"><span style=\"font-weight: 400;\">suggested<\/span><\/a><span style=\"font-weight: 400;\"> by Federal Reserve Chairman Jerome Powell, might also have ramifications for South Korea\u2019s economy. An outflow of foreign investors seeking higher returns in the U.S. could strengthen the dollar against the South Korean won, consequently raising the cost of imports.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>South Korea\u2019s consumer price growth fell below 3% for the first time in nearly two years, marking the fifth consecutive month of deceleration, according to a Statistics Korea report. The drop to a 2.7% year-on-year increase in June from a 3.3% rise in May reflects declining fuel costs and a slower service sector growth rate. [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2201585,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"class_list":["post-2201584","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>South Korea\u2019s inflation dips below 3% for the first time in two years - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2023\/07\/south-koreas-inflation-dips-below-3-for-the-first-time-in-two-years\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Korea\u2019s inflation dips below 3% for the first time in two years - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"South Korea\u2019s consumer price growth fell below 3% for the first time in nearly two years, marking the fifth consecutive month of deceleration, according to a Statistics Korea report. 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