South Korea: Inflation out of contraction territory – ANZ

The Australia and New Zealand Banking Group analysts provide their quick reaction to the South Korean inflation report released earlier this Friday.

Key Quotes:

“South Korea’s headline inflation returned to zero in October, after slipping into negative territory in September. Slowing food price deflation led the rise, but core inflation also rose to 0.8% y/y.

We expect headline inflation to approach 1% in the coming quarters, as high base effects fade.

Coupled with signs that economic growth is starting to stabilise, we believe that the Bank of Korea (BoK) will hold its policy rate at 1.25% for a prolonged period.“