South Korea’s headline inflation likely remained stable in March

South Korea’s headline inflation in March is expected to have remained stable on year-on-year basis, whereas on month-on-month basis it might be zero, according to Societe Generale.

“Headline inflation is likely to stay at 1.3% yoy in March. Core inflation is expected to rise by 0.1ppt to 1.9% yoy, while the mom figure is likely to remain at 0.3%”, says Societe Generale.

Prices of fresh food are expected to have declined moderately in March after rising considerably from December 2015. The pace of drop in oil prices has alleviated because of recovery in crude oil prices. Therefore there is possibility of retail oil prices to turnaround in April. Drop in retail gas tariffs are expected to have mainly cap the headline CPI as this is projected to have lowered it by 0.15ppt.

Core manufacturing goods and services inflation are expected to have risen steadily. Base effects from oil prices are likely to further accelerate headline inflation in H2 2016, according to Societe Generale.

“Stable core inflation of around 2% will help ease deflation concerns among policymakers and market participants”, says Societe Generale.