South Korean inflation rises in December, remains in line with market expectations

Consumer inflation in South Korea rose during the month of December, remaining in line with what markets had initially anticipated.

South Korean consumer prices were up 1.3 percent on year in December, data released by Statistics Korea showed Friday. That exceeded expectations for 1.2 percent, although it was unchanged from the November reading.

On a monthly basis, prices were down 0.1 percent for the second straight month. Core CPI was up 1.4 percent on year, up from 0.7 percent in the previous month. Prices also were down 0.1 percent on month after rising 0.2 a month earlier.

However, the sub-indices showed costs for electricity, gas and tap water dropped 11.5 per cent on-year in December, the sharpest drop since September this year, due to changes in residential electricity tariffs. This drop was partly offset by inflation from agricultural, livestock and fisheries products, which stood at 6.7 percent in December on-year, reflecting rapidly rising egg prices sparked by an outbreak of avian influenza the government has been struggling to contain for over a month, Reuters reported.

Moreover, Core CPI, which excludes oil and agricultural products, rose 1.2 percent from a year ago, slowing from 1.6 percent in November and marking the lowest since December 2012 when it gained 1.1 percent. Nevertheless, for the whole of 2016, inflation stood at one percent, in line with forecasts from the government and central bank and accelerating from 0.7 percent in 2015.

Meanwhile, USD/KRW traded at 1,205.96, down -0.04 percent at 4:15GMT.