Korea's central bank has further slashed its outlook on inflation for this year due to a continued fall in global oil prices and stubbornly weak consumer sentiment here, a report showed Thursday.
In a special report, the Bank of Korea (BOK) forecast consumer prices will rise 1.4 percent this year, lower than a 1.7 percent on-year increase predicted earlier.
The new outlook also comes about a month after the central bank set its inflation target for 2016-2018 at 2 percent.
"Consumer prices are expected to continue facing downside pressure from the demand side, while on the supply side, the impact from low oil prices will likely last," the report said.
Consumer prices are expected to rise 1.2 percent in the first half of the year, followed by a 1.5 percent on-year growth in the second half.
The country's core inflation, which excludes volatile oil and food prices, is expected to increase 1.8 percent.
The BOK said consumer prices will likely reach 2 percent in 2017 with the impact of low oil prices wearing off.
Under the new inflation target system announced Jan. 16, the BOK governor is required to hold an emergency press conference to offer an explanation for a failure to meet the inflation target once the actual inflation deviates from the 2 percent target by more than 0.5 percentage point for more than six months.
The BOK partly blamed low global inflation for the latest reduction in its outlook for Asia's fourth-largest economy, noting South Korea's inflation was the 10th highest among 37 advanced economies in 2015.
In 2015, the country's consumer prices inched up 0.7 percent with its core inflation gaining 2.2 percent, according to the BOK.
Consumer prices rose 0.5 percent in the first half of last year and 0.9 percent in the latter half. (Yonhap)
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