South Korea’s inflation rate quickens to 2-1/2-year high
FILE PHOTO: A woman shops at an underground shopping district in the Gangnam area of Seoul, South Korea, June 28, 2016. Picture taken June 28, 2016. REUTERS/Kim Hong-Ji/File Photo
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SEOUL, July 2 : South Korea’s consumer inflation accelerated to a two-and-a-half-year high in June, cementing expectations for an interest rate hike by the central bank as early as its upcoming policy meeting on July 16.
The consumer price index (CPI) rose 3.2 per cent from a year earlier, marking the biggest jump since December 2023 after accelerating from 3.1 per cent in May, according to the Ministry of Data and Statistics. It matched the median forecast in Reuters polls.
On a month-on-month basis, the index edged up 0.1 per cent, which also aligned with market expectations.
The accelerating price pressures were heavily driven by high global oil prices, stoked by ongoing geopolitical instability in the Middle East. Supply-side pressures have also been aggravated by a weaker South Korean won, which has increased the cost of imported raw materials.
Five of the seven members on the Bank of Korea’s monetary policy board voted to keep its benchmark interest rate unchanged at 2.50 per cent on May 28, while two dissenters voted for a 25-basis-point hike.
Around two-thirds of the economists polled in May predicted at least one rate hike by end-September.
Source: Reuters
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