South Korea’s Year-on-year inflation in both headline and core CPI is likely to have declined further in March, which would continue to support market participants’ concerns about deflation.Retail oil prices rose rather significantly due to the rebound in crude oil prices. It is also seen that almost 10% cut in city gas fares, which effectively offset the impact of higher oil prices on headline CPI. Steady core inflation of around 0.15% mom, thanks to non-oil manufacturing and services sectors, would also be offset by the seasonal decline in fresh food prices. The mom headline inflation probably stayed at zero for a second consecutive month. The turnaround in headline inflation should only be driven by a clear rebound in crude oil prices. “Sustained decline in headline and core inflation will support our BoK call of a further 25bp rate cut in Q2”, said Societe Generale in a report on Tuesday.
The material has been provided by InstaForex Company – www.instaforex.com