2019.10.0100:13:00UTC+00South Korea Consumer Prices Fall For First Time On Record

South Korea's consumer prices declined for the first time on record in September and exports continued to fall, adding pressure on the central bank to ease monetary policy.

Consumer prices fell 0.4 percent year-on-year in September after staying flat in August, data from Statistics Korea showed Tuesday. Prices were expected to drop 0.3 percent.

Excluding food and energy, inflation eased to 0.5 percent from 0.8 percent.

On a monthly basis, overall consumer prices rose at a faster pace of 0.4 percent after gaining 0.2 percent.

Elsewhere, survey data from IHS Markit showed the manufacturing sector contracted for the fifth straight month in September. The Purchasing Managers' Index fell to 48.0 in September from 49.0 in August.

The manufacturing economy remained challenging as weak demand and subdued outlook weighed on production and employment.

"Overall, latest survey data suggest that if spillover effects from the global growth slowdown are manifesting themselves in the domestic economy, the Bank of Korea may soon have to follow the current global trend of looser monetary policy," Joe Hayes, an economist at IHS Markit, said.

With deflation likely to prove only temporary, the central bank is unlikely to panic into cutting interest rates aggressively, Gareth Leather, an economist at Capital Economics, said.

That said, with inflation set to stay well below the central bank's 2.0 percent inflation target and growth likely to remain weak, more cuts are likely, the economist noted.

According to customs bureau, South Korea's exports declined for the tenth straight month on weak demand for semiconductor products.

Exports decreased 11.7 percent and imports dropped 5.6 percent, leading to a trade surplus of $5.9 billion in September.