SEOUL: South Korean consumer inflation in September eased by a full percentage point to a four-month low, matching analysts' expectations and supporting the market's view for no change in interest rates for the time being.
The consumer price index rose 4.3 percent in September from a year earlier, government data showed on Tuesday, coming off a three-year high of 5.3 percent set in August and matching the forecast in a Reuters survey
Analysts said the easing inflation, although still above the upper end of the central bank's 2-4 percent target band, supported their view that the Bank of Korea would focus more on the risks from an economic slowdown for the time being.
"I think the central bank will freeze the base rate until June next year," said Suh Dae-il, an economist at Daewoo Securities, although he expected year-on-year inflation to stay above the central bank target for a few more months.
The data was released before local financial markets opened.
The eased September inflation owed much to a sharp fall in fresh food prices on the back of increased harvests on good weather conditions, and to the fact that prices were unusually high in September last year.
Core inflation, which excludes volatile food and fuel prices, also fell to 3.9 percent year-on-year in September from 4.0 percent in August, the first time that it eased since April this year.
Last month, the Bank of Korea held the policy interest rate steady at 3.25 percent for a third consecutive month despite high inflation, mindful of spreading fears that major economies were stepping back into a recession.
The central bank raised the 7-day repurchase agreement rate by a total of 125 basis points between July last year and June this year, unwinding part of its total 325 basis-point cut during the 2008-2009 global crisis.
It will next review rates on Oct. 13.
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