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South Korea inflation eases in December, central bank warns on price, policy link

South Korea inflation eases in December, central bank warns on price, policy link

SEOUL: South Korea reported its lowest inflation in more than 15 years, which could reinforce expectations for an interest rate cut early in 2015 though the central bank governor seems to feel there’s no hurry for one.

December’s consumer price index rose 0.8 percent from a year earlier. The increase was the smallest since September 1999’s 0.8 percent annual rate and matched the median forecast for December. A key factor for low inflation was low energy prices.

Ma Juok, economist at Kiwoom Securities in Seoul, said sluggish domestic consumption growth will continue to contribute in pulling down inflation next year.

Policymakers have said they expect the inflation rate to rise to around 2 percent late in 2015 as consumption accelerates as part of economic recovery.