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CPI Momentum Eases, Core Back To 2.3% Y/Y, PMI Off Recent Highs

SOUTH KOREA

Earlier South Korean CPI printed a touch weaker than expectations. M/M was flat against a 0.1% forecast and 0.1% prior outcome. Headline rose 2.9%y/y against a 3.0% forecast and 3.1% prior. Core (ex food and energy) was 2.3% y/y, in line with market forecasts but still slightly off March's 2.4% pace.

  • The trend improvement in core CPI continues, not too far off the 2% BoK inflation target. The headline trend has been more sporadic, but still encouraging, see the chart below. The authorities are likely to want to see consumer inflation expectations also ease (which have been wedged above 3% in recent months).
  • In terms of the detail, food prices fell 1.2% m/m, as the main drag. Transport rose 0.9% m/m, while recreation also climbed 0.5% m/m, as offsets. Other sub categories saw either flat or modest gains for the most part.
  • In y/y terms, trends were mixed. Food, at 5.9%, is still the firmest pace, but is off earlier 2024 highs. Clothing at 5.3% is the next strongest, but also decelerating. Transport y/y momentum continued to pick up though to 2.9%, after being negative late in 2023/earlier this year.
  • Also out was the April manufacturing PMI. We eased back to 49.4 from 49.8 in March. Still, the output sub index was 50.1 from 49.8 in March, while new orders also rose from March levels.

Fig 1: South Korean Headline & Core CPI Y/Y Trends

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Earlier South Korean CPI printed a touch weaker than expectations. M/M was flat against a 0.1% forecast and 0.1% prior outcome. Headline rose 2.9%y/y against a 3.0% forecast and 3.1% prior. Core (ex food and energy) was 2.3% y/y, in line with market forecasts but still slightly off March's 2.4% pace.

  • The trend improvement in core CPI continues, not too far off the 2% BoK inflation target. The headline trend has been more sporadic, but still encouraging, see the chart below. The authorities are likely to want to see consumer inflation expectations also ease (which have been wedged above 3% in recent months).
  • In terms of the detail, food prices fell 1.2% m/m, as the main drag. Transport rose 0.9% m/m, while recreation also climbed 0.5% m/m, as offsets. Other sub categories saw either flat or modest gains for the most part.
  • In y/y terms, trends were mixed. Food, at 5.9%, is still the firmest pace, but is off earlier 2024 highs. Clothing at 5.3% is the next strongest, but also decelerating. Transport y/y momentum continued to pick up though to 2.9%, after being negative late in 2023/earlier this year.
  • Also out was the April manufacturing PMI. We eased back to 49.4 from 49.8 in March. Still, the output sub index was 50.1 from 49.8 in March, while new orders also rose from March levels.

Fig 1: South Korean Headline & Core CPI Y/Y Trends

Keep reading...Show less