SEOUL, South Korea's consumer prices' on-year growth may fall below 4 percent starting the second quarter of 2023, the finance minister said Thursday, amid expectations inflation will slow throughout this year amid monetary tightening moves.
South Korea's on-year growth in consumer prices fell below 5 percent for the first time in 10 months at 4.8 percent last month from a year earlier, compared with 5.2 percent growth posted in January. The Bank of Korea (BOK) suggested a 4.5-percent rise for March.
"Our expectations are not too far off from the BOK's forecast for March," Finance Minister Choo Kyung-ho said during a meeting with reporters, hinting the figure may even drop below 4 percent starting in the second quarter.
"As long as there are no unusual weather conditions or extraordinary factors, the rise in consumer prices is expected to fall below the 4.8 percent tallied in February," Choo said.
The outlook came after the BOK kept the benchmark interest rate unchanged at 3.5 percent for the first time in 10 months in February. The central bank previously had seven straight rate hikes since April last year to tame inflation.
Concerning the burden for the people due to soaring energy costs, Choo said utility fees were based on the global price of resources as well as the financial health of state-run companies, claiming such factors should be considered when discussing an adjustment.
The prices of utility services, including electricity and gas, went up 28.4 percent on-year in February to set a new high amid the prolonged war between Russia and Ukraine. Asia's No. 4 economy depends heavily on imports for its energy needs.
Choo, meanwhile, added the government plans to come up with measures to revitalize domestic consumption in the near future.
"Recently, exports have been significantly sluggish due to the chip sector. On top of that, the impact of China's reopening has not yet had an impact on outbound shipments," the minister said, adding there has been a consensus that the government needs to take action to boost domestic demand.
Source: Yonhap News Agency