S.Korea inflation ticks up in Oct, seen staying elevated for while

South Korea’s annual consumer inflation in October ticked up from September against market expectations for no change, led by lagging effects of earlier global raw materials prices, government data showed on Wednesday.

Both the finance ministry and the central bank played down the accelerated pace of prices growth in separate statements and affirmed their previous projections that inflation would stay elevated for some time.

The consumer price index (CPI) rose 5.7% in October from a year earlier, according to the Statistics Korea data. The rate had slowed in September to 5.6% from 5.7% in August, compared with a near 24-year high of 6.3% in July.

The median forecast in a Reuters survey of economists was for the annual CPI growth to be 5.6% in October, although five of the 11 economists polled predicted higher rates.

“This is in line with our view that inflation has passed its peak, and I think the Bank of Korea will pay more attention to credit market conditions and the U.S. policy prospects,” said Park Sang-hyun, economist at HI Investment & Securities.

The country’s central bank, which has raised the policy interest rate by a combined 250 basis points since the middle of last year from record-low 0.5%, next meets on Nov. 24 to set the rate.

The Bank of Korea said in a statement issued after an internal meeting of officials that it expected inflation would stay at the 5% level through the first quarter of next year, though the level of uncertainty was high.

The CPI rose 0.3% in October on a monthly basis, the same rate as in September and higher than a 0.2% gain seen in the survey.

Core inflation, which strips volatile foods and energy prices, ticked up to 4.2% in October on an annual basis from 4.1% in September to mark the fastest since December 2008.