South Korea’s inflation slows more than expected in April

But weakening won poses challenge to policymakers’ efforts to cool price growth

South Korea's inflation slowed more than expected, in an indication policymakers are making progress in their campaign to cool price growth even as the weakening won may pose a challenge to those efforts in coming months.

Consumer prices advanced 2.9 per cent in April from a year earlier, decelerating from 3.1 per cent in March, South Korea's statistics office reported on May 2. Economists surveyed by Bloomberg had forecast the pace of price growth would slow to 3 per cent. Prices excluding food and energy increased 2.3 per cent, matching forecasts.

While the indication of cooling inflation raises hopes for the Bank of Korea (BOK) to stay on the path towards considering a policy pivot at some point later in 2024, it is not likely to prompt any major shift when the board gathers later in May, particularly as the US dollarwon exchange rate stays elevated.

South Korea relies heavily on imports for food and energy, and its currency has been one of Asia's worst-performing in the past month along with Japan's yen and Indonesia's rupiah. Reluctance by the US Federal Reserve to lower borrowing costs has hurt emerging-market currencies.