Higher prices for food and industrial goods are expected to fuel South Korean inflation in January, but not enough for analysts to expect the central bank to rethink its policy of low interest rates.
The median forecast in a Reuters poll was for the consumer prices index (CPI) for January to rise 0.5 percent, which would be the second monthly increase in a row. The index, which is adjusted for seasonal patterns, rose 0.4 percent in November.
"The January CPI is expected to rise because food costs were higher due to the Lunar New Year Holidays and because higher raw material prices boosted prices of industrial goods," said Lee Sang-jae, an economist at Hyundai Securities.
"The Bank of Korea does not think this is the time to raise interest rates, because inflationary pressure is not strong enough. Domestic spending is still poor," he said.