SEOUL (Reuters) – South Korea’s consumer inflation softened in February for the first time in four months, government data showed on Thursday, providing at least some relief to policymakers looking to further ease monetary policy.
The consumer price index (CPI) rose 2.0% from a year earlier, slower than a gain of 2.2% in the previous month, according to Statistics Korea. It was slightly higher than a median 1.95% increase tipped in a Reuters poll.
The slowdown in February came after inflation accelerated in January to a six-month high, driven by a weak won, and above the central bank’s medium-term target of 2%.
The won has strengthened 2% against the dollar this year to trade at 1,444.2 per dollar on Thursday, after weakening more than 12% last year for its biggest drop in 16 years on domestic political instability.
“Going forward, consumer inflation is expected to fluctuate around the target level amid mixed factors of a weak local currency and low demand pressure,” the Bank of Korea said after the data release.
Last week, the central bank cut interest rates and said there would be more easing this year, steering Asia’s fourth-largest economy from a restrictive monetary policy stance towards an accommodative one to support growth.
CPI rose 0.3% on a monthly basis, compared with gains of 0.7% in the previous month and 0.2% expected by economists.
(Reporting by Jihoon Lee; Editing by Chris Reese and Shri Navaratnam)
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