South Korea: CPI inflation to have dropped below 1% – Standard Chartered

South Korea is scheduled to release February export data on 1 March and February CPI data on 4 March. Analysts at Standard Chartered Bank forecast the data expected for the next week. USD/KRW is being traded at 1207.44.

Key quotes

“We expect CPI inflation to have decreased to 0.1% m/m and increased to 0.9% y/y.” 

“We expect CPI inflation to have dropped in February on a decline in oil prices and depressed consumer sentiment due to the virus outbreak. Although the coronavirus impact likely pushed up prices of agricultural products and daily necessities, we expect it to have driven down prices in the services industry by a much larger extent. Going forward, possible supply shocks in certain industries due to the coronavirus could increase inflation sharply.”

“We expect exports to have increased by 3.5% after 14 months of declines due to more working days in the month than in February 2019 and the Lunar New Year effect, while we expect Korea’s imports to have increased by 3.4% after nine months of consecutive declines. As a result, the trade surplus likely widened to USD 3.014bn, stronger than the three-month average of USD 1.942bn.”