S. Korean inflation hits record low in 2019 amid sluggish exports and consumption

By Lim Chang-won Posted : December 31, 2019, 15:28 Updated : December 31, 2019, 15:28

[Yonhap News Photo]

SEOUL -- Inflation gained 0.4 percent in 2019, the lowest level since South Korea started compiling related data in 1965, as Asia's fourth-largest economy lost its growth momentum due to sluggish consumption and weak exports. Last year, consumer prices grew 1.5 percent on-year.

Lee Doo-won, director of Statistics Korea's price statistics division, attributed South Korea's low inflation rate to falling prices of oil as well as agricultural, livestock and marine products, coupled with the expansion of free education and health insurance coverage.

Some experts have warned South Korea could see a period of stagnation that Japan had experienced following the asset price bubble's collapse in late 1991 and early 1992. However, Lee played down concerns about deflation, saying next year's inflation rate would be higher than this year's if the base effect of falling prices this year disappears. "Deflation is not much of a concern."

In a new year's message, Bank of Korea Governor Lee Ju-yeol said internal and external conditions would remain uncertain in 2020. "Since the domestic economy is expected to grow below the level of potential growth and inflationary pressure is expected to be weak in terms of demand, we need to maintain an easing stance (in monetary policy)."
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