South Korea Climbs Out Of Deflation – Barely

South Korea delivered another set of uninspiring numbers on Monday.

Just a day after the trade ministry broke the bad news that exports dove a much worse than expected 14.3% in November, statistics Korea said consumer prices dropped 0.6% MoM, against estimates for a slight gain.

The YoY print was bad too, as the CPI rose just 0.2%, not even close to the 0.7% gain consensus was looking for.

On the “bright” side, the November read means inflation is positive again for the first time in four months.

Still, these numbers aren’t likely to inspire much confidence, especially coming as they do on the heels of the BOK meeting, after which policymakers slashed their growth and inflation targets for this year and next. “We expect inflation to hover around 0% for the next few months, then rise back toward 1% in the year ahead”, Bloomberg’s Justin Jimenez said Monday.

Exports have fallen for a dozen consecutive months, underscoring the damage from the ongoing trade war, which continues to weigh on global demand to the detriment of export-dependent economies. “While falling prices remained the main driver behind the weakness, declines in volume growth also contributed”, Goldman said of Sunday’s trade data.

Weighing in, BofA summed things up, noting that the “worst is over [for South Korea] but only by a slight margin”.


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