Forex - Korea Flows: USD/KRW; headline inflation firms up to 0.7% y/y in June

Published at 01:06 (GMT) 1 Jul

   

EMGA KRW FX FLOWS: USD/KRW; headline inflation firms up to 0.7%y/y in June

South Korea's CPI inched up 0.7%y/y as compared to 0.5%y/y growth in May. "Consumer inflation numbers are mainly being influenced by weak international crude oil prices," said Kim Bo-kyoung, head of the statistical agency's prices statistics division. "The lowering of utility prices such as gas, electricity and water further contributed to weak price gains." Oil prices plunged 17%y/y in June, while gas, electricity and water charges fell 9%y/y. On the other hand, agrofisheries prices advanced 4.1%y/y last month, up from 2.7%y/y reported for May.

The agency said that for last month, the country's consumer prices were in positive territory even if the 2,000 won (US$1.78) increase in cigarette prices, which boosted inflation numbers this year, is excluded.

The country's core inflation, which excludes volatile oil and food prices, increased 2% y/y, down slightly from 2.1%y/y growth from the previous month. June marked the sixth straight month that core inflation grew more than 2%y/y. The statistical office claimed that the core inflation rate exceeding the 2% mark is a sign that people are spending.

The cost of services gained 1.6%y/y in June from the year before and was unchanged vis-a-vis May. The steady numbers come amid a rise in rent costs, as well as gains in private and public service fees. The report, however, showed that the "living necessities" price index, which measures the cost of key products that people consume on a daily basis, again contracted 0.1%y/y.

On FX, USD/KRW opened the day slightly firmer at 1118.8 vs. last close at 1115.5. Pair is likely to remain supported as Greece related concerns spook the markets. KOSPI trading flat at last check, around 2075.00 lvls. BB