South Korea inflation jumps to three-year high
Statistics Korea has today revealed South Korea’s inflation rate jumped to a three-year high of 5.3% in August as food costs continued to rise.
The rate is up from 4.7% in July and represents the eighth consecutive month that inflation has been above the central bank’s target of 4%.
Inflationary pressures are rife throughout the world, but particularly in Asia; Hong Kong’s inflation rate hit a 35-month high in July, driven by food prices and rising housing costs.
Food prices have risen due to heavy summer rain in Seoul, which caused significant crop damage.
Many central banks have opted to hike interest rates in a bid to combat stubbornly high inflation but analysts do not expect the Bank of Korea to lift interest rates in the short-term, primarily because of uncertainty surrounding the global economy.
The Bank of Korea has already raised interest rates three times this year in a bid to tame rising prices but last month opted to keep its key interest rate unchanged at 3.25% for the second consecutive month.
Meanwhile, the economy experienced further bad news this week after it was revealed factory output declined 0.4% in July on a monthly basis.
Factory output figures are closely-watched as South Korea is one of Asia’s leading exporters and is a general indicator of the health of the global economy.
South Korea, which is Asia’s fourth largest economy, experienced growth of 3.4% in the second quarter on an annual basis, down from 4.2% in the previous quarter, as exports slowed and manufacturing weakened.
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