Korea faces no immediate danger from low inflation: BOK
Korea will not face any serious problems due to its low inflation, the central bank said Monday, insisting the recent record-low inflation largely stems from issues related to the supply side and that they will soon go away. Consumer price growth in Asia’s fourth-largest economy has remained far below the annual target of 2 percent for years, dipping to an all-time low of 0.5 percent in the first eight months of the year.
In a report, the Bank of Korea said low inflation could be observed in most major economies following the 1997 Asian financial crisis and the 2008 global financial crisis, but also in the case of problems arising from the supply side, such as oversupply.
The report was based on a study of price changes in 41 major economies throughout the world, including the 36 member countries of the Organization for Economic Cooperation and Development.
“While the rate of fall in prices increased and the growth rate slowed in the case of a foreign exchange or financial crisis, the rate of price fall was relatively slower in a period of decline caused by supply issues while there were no meaningful changes to the growth rate,” the report said.
The report also ruled out the possibility of deflation or low inflation for an extended period of time, noting the ratio of products that currently face falling prices here remains below 30 percent.