South Korea’s Import Prices Rise

SEOUL (Reuters) – South Korea’s import prices accelerated in December at the fastest pace in five months, according to central bank data released on Wednesday, indicating renewed inflationary pressures due to a weakened local currency.

The import price index in local currency rose 7.0% in December from a year earlier, marking the fastest increase since last July, as reported by the Bank of Korea.

This was the second consecutive month of gains in import prices, which influence consumer prices with a time lag, following an increase of 2.8% in November.

The won depreciated 5.2% against the dollar in December, recording its largest monthly decline in 22 months and reaching its weakest level since March 2009, attributed to domestic political turmoil.

In December, South Korea’s consumer inflation quickened to 1.9%, exceeding market expectations and nearing the Bank of Korea’s (BoK) 2% target, prompting concerns of further inflation acceleration this month.

The BoK is anticipated to decrease interest rates by a quarter percentage point to 2.75% on Thursday, a month sooner than initially expected, aiming to support a struggling economy amidst political uncertainties.

Additionally, the export price index rose 10.7% last month, also the fastest in five months, following a 7.0% increase in November.