Korea faces no im­me­di­ate dan­ger from low in­fla­tion: BOK

The Korea Times - - FINANCE -

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.

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