ANN/THE KOREA HERALD – The recent decline of the Korean won is anticipated to increase inflationary pressure on South Korea’s economy, leading to higher consumer prices, according to a central bank report released yesterday.
The Bank of Korea (BOK) estimated that the sharp depreciation of the local currency likely raised the consumer price index for last month by 0.05 to 0.1 percentage points, as detailed in a report submitted to Representative Lim Kwang-hyun of the main opposition Democratic Party.
In December, consumer prices grew 1.9 per cent from the same month last year, accelerating from the 1.5 per cent on-year growth recorded in November.
The BOK anticipated consumer prices could further go up this month as the weakness of the Korean won will continue to put inflationary pressure on the economy, but will hover below the two per cent level considering the low pressure from demand and the base effect in oil and agriculture prices. The value of South Korea’s currency against the United States dollar fell 5.3 per cent in December from a month earlier amid growth woes.
It marked the second-biggest drop among currencies of 20 major economies, after the Russian ruble’s 6.4 per cent fall, according to the report.
The Korean won traded at KRW1,472.5 per dollar as of end-December, compared with KRW1,394.7 a month ago.
