South Korea’s consumer prices grew at the fastest pace in 20 months and exports jumped more than projected, bolstering the case for higher borrowing costs.
The consumer price index increased 4.1 percent last month from a year earlier, quickening from a 3.6 percent advance in September, the statistics office said in Gwacheon yesterday. Exports grew 29.9 percent, more than the 16.2 percent predicted by seven economists in a Bloomberg News survey, another report showed.
The data signal pressure may grow on the Bank of Korea to end a three-month pause in -interest-rate increases. Inflation exceeded the central bank’s 4 percent ceiling even after the pace of economic expansion halved last quarter as goods shipments eased and the won surged.
“Today’s inflation and trade data further prove the current interest rate is too low and the central bank may raise rates as early as this month,” said Lim Ji-won, an economist at JPMorgan Chase & Co in Seoul, referring to the benchmark interest rate of 2.25 percent.
The Bank of Korea has increased borrowing costs only once this year, by a quarter point from a record-low 2 percent in July, after the fastest first-half economic expansion in a decade stoked price pressures. The monetary authority aims for inflation of 2 percent to 4 percent on average through 2012.
“Once prices are out of control, it will become a big challenge for policy making,” Deputy Finance Minister Kang Ho-in told reporters in Gwacheon yesterday. “It’s important to take pre-emptive measures to curb inflation pressures.”
South Korean companies have benefited from rival Japan’s struggle to restrain a larger jump in the yen against the US dollar since the start this year. Samsung Electronics Co, Asia’s biggest maker of semiconductors, flat screens and mobile phones, said last week third-quarter profit increased 17 percent to a record.
Still, the rate of expansion in Asia’s fourth-largest economy fell to 0.7 percent last quarter as the won rose 7.2 percent over the period, the most of any Asian currency, and growth in goods shipments eased.
The won’s performance has added to risks to exports from elevated US unemployment and European austerity. Samsung last week also forecast weaker fourth-quarter earnings because of falling prices and the strengthening currency. Overseas shipments account for about half the US$832.5 billion economy.
“I caution against reading too much into these data points,” Erik Lueth, a Hong Kong-based senior regional economist at Royal Bank of Scotland Group PLC, said in a note, referring to yesterday’s data.
Core inflation was flat and last month’s export numbers were “artificially” inflated because a harvest festival holiday season took place in the same month last year, he said. He expects the central bank to raise interest rates again in the first quarter of next year.
Core prices, which exclude oil and food, rose 1.9 percent last month from a year earlier, the same pace as in September, according to yesterday’s report.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to