SEOUL — South Korea’s inflation eased more than expected in November and exports stayed strong despite a smaller trade surplus, helping allay fears the economy may be hit by fragility in the West’s recovery.
Easing inflationary pressure is likely to give the central bank room to pace its monetary tightening, economists said.
The trade surplus narrowed sharply in November from a month earlier due to strong imports but the balance remained in the black for the 10th straight month, official figures showed. Exports last month rose 24.6 percent year-on-year to US$42.36 billion, while imports surged 31.2 percent to US$38.75 billion on strong domestic demand, resulting in a US$3.61 billion surplus. The country achieved a revised trade surplus of US$6.48 billion in October. The Ministry of Knowledge Economy, giving the preliminary figures for November, said the semiconductor and automobile industries led export growth. Their outbound shipments in November jumped 36.3 percent and 21.8 percent from a year earlier, respectively. “We expect the country’s exports to shrink somewhat in December from last month but they will still reach US$40 billion,” Assistant Minister for Trade and Investment Kim Kyung-Sik told journalists. The recent rise in the won undermined export competitiveness and buoyed imports, Moody’s Analytics said in a commentary. It said falling demand in some key export markets was also evident in November, though no clear trend emerged as shipments to other destinations flourished. The inflation rate eased in November as fresh food prices fell amid increased supply. Statistics Korea said the consumer price index rose 3.3 percent last month from a year earlier, down from 4.1 percent in October.
The index measuring fresh food fell 11.3 percent in November from a month earlier. Compared with a year earlier, prices were 37.4 percent higher against a jump of 49.4 percent in October.
Prices of fresh vegetables, particularly cabbages, have soared in recent months after heavy rain and unusually high temperatures ruined much of the country’s vegetable patches.
The central bank in July increased its key interest rate for the first time in nearly two years, to 2.25 percent, as the accelerating recovery fanned inflationary pressure.
It raised the rate again to 2.5 percent in November.