Korean Non-core inflation likely to be steady around 2.5%

Korean Non-core inflation remained below -10 percent from January to November in 2015, which is considered to be the main driver of the historically low headline inflation. Non-core food and oil products, the two components of non-core inflation portrayed a clear contrast in 2015.

Non-core food inflation including fruits and vegetables witnessed a decline in prices in 2014, but in 2015  it was restored to a normal level as the annual average surged from -11.7 percent in 2014 to 2.6 percent in 2015. Oil inflation dropped drastically in the beginning of 2015 as the annual average plunged from -1.2 percent in 2014 to -18.2ercent in 2015.

"We believe that the outlook for non-core inflation now depends on oil prices. It is difficult to forecast the prices of fruits and vegetables that are often affected by weather conditions, and we just assume that non-core food inflation will be steady around last year's average around 2.5% " - Societe Generale