SocGen Predicts South Korea’s December CPI This Week
Societe Generale said South Korea’s headline consumer price index (CPI) was expected to have eased in December after the impressive rise in October and November, although it was likely to have remained elevated at 3.5% y/y.
South Korea was slated to release December CPI data at 11:30 p.m. GMT on Friday.
The main driver for the decline in year-on-year headline inflation should be energy inflation, noted the bank. The temporary fuel tax cut implemented in mid-November should be reflected in the December CPI, and the crude oil price also declined due to concerns about the omicron variant.
Fresh food inflation was likely to fall a bit after the jump in November, while the recent steady rise in processed food inflation should continue for another month. Core inflation should finally break through the 2.0% y/y level (at 2.1%) , extending the rising trend that started early this year.
Core goods inflation was expected to rise as global supply problems began to affect South Korea, while SocGen should also see the boost from base effects.
In the services sector, housing rent and eating-out services inflation were likely to extend the recent increases, while personal services inflation excluding eating-out services and public services inflation were unlikely to change much from November.
The high level of inflation — headline above 3% and core above 2% — will reinforce the Bank of Korea (BoK) policymakers’ inflation concerns and SocGen’s base scenario of a total of 100bp rate hike in 2022.
Meanwhile, the government planned to revise the CPI benchmark from the release of December 2021 CPI, including the change in base year from 2015 to 2020 and the revision to the items and weights of the basket, though its accurate impacts on
the measured inflation was difficult to catch in advance.
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