Signal Price co-movement across Korean core items strengthens once core inflation exceeds about 2.5 percent

Summary

The issue analysis finds a threshold in how price increases spread across core consumer items. Historical Korean data show that once core inflation rose above roughly 2.5 percent, the synchronisation of price increases across items strengthened quickly, especially in personal services. When that happens, price pressure can intensify because rises are no longer confined to individual items. Core inflation is already rising from the mid 2 percent range. The analysis therefore warns that price increases could spread to other items and further strengthen upward pressure on overall core inflation.