Korean Prices in Deflation Territory

Price levels in South Korea have slipped into negative growth territory twice within the span of a year, stoking fears of deflation.

According to the Korean Statistics Office, prices decreased by 0.4 percent in September 2019 (compared to the previous year) and again by 0.3 percent in May due to the coronavirus crisis. It was the first time on record that the country, a longtime economic powerhouse, has exhibited negative price growth. Global economic turmoil disproportionally affects South Korea’s strong export sector (which exists mainly due to its large tech economy), causing the first dip. The economy entered the coronavirus pandemic already weakened by the 2019 global economic slowdown which contributed to the second dip.

The release of fresh CPI data today looked a bit better, with November prices growing 0.6 percent year-over-year.