Consumer prices slow in October

Consumer prices increased at the slowest pace in 10 months during October this year, according to state-run Statistics Korea Wednesday.

The consumer price index (CPI) rose 1.8 percent last month from the previous year.

The most recent slowest rate was 1.3 percent in December last year.

Slow inflation comes as the prices of agricultural and meat products have begun to stabilize after a summer drought and the outbreak of avian flu had been contained.

Prices of livestock products increased 1.9 percent in October, the slowest pace since July 2015.

Also, vegetable prices decreased 9.7 percent, which contributed to a 0.18 percentage point decline in the CPI.

However, grain prices gained 6.5 percent due to a rebound in the price of rice.

It remains to be seen whether consumer prices will continue to slow down this month.

Uncertainties over oil price volatility persist which can affect inflation.

Beginning this month, gas utility fees will drop 9.3 percent on average as part of the government’s price stability plan.

About 14.2 million households are expected to see a drop of 7,400 won in their gas utility bills during the winter.

“Considering the gas price drops in November, we will have to see how this will affect the CPI,” a Statistics Korea official said.

The central bank seeks to keep the CPI within its target range, which is near 2 percent.

A rise in consumer prices still would limit household spending, further hindering the economy from posting a marked recovery amid high unemployment.

Even though the economy grew 3 percent in the third quarter, Bank of Korea Governor Lee Ju-yeol told the National Assembly audit committee that it remains to be seen whether growth can continue to be maintained.

He added the central bank will remain cautious and keep on communicating with the market to avoid causing side effects before its decision on the key rate.