Consumer Inflation in South Korea

SEOUL (Reuters) – South Korea’s consumer inflation ticked up in July due to supply-side pressures after weakening for three consecutive months, according to official data released on Friday. The inflation rate came in slightly higher than market expectations.

The consumer price index (CPI) in July rose 2.6% compared to the same month a year earlier, following an 11-month low of 2.4% in June. Economists in a Reuters survey had anticipated a gain of 2.5%.

This rise in consumer prices aligns with the finance minister’s remarks from last week, suggesting that inflation might temporarily increase due to abnormal weather conditions and base effects before stabilizing starting in August.

Last month, the Bank of Korea considered rate cuts after maintaining interest rates at a 15-year high of 3.50% for the 12th consecutive meeting, although the board was divided on the timing.

The CPI increased 0.3% on a monthly basis, recovering from a 0.2% decline the previous month, marking the fastest rise in five months and slightly exceeding economists’ median expectation of a 0.25% increase.

Prices for petroleum products rose 3.3% over the month, while agricultural products climbed 0.9%, with vegetable prices seeing a significant jump of 6.3%.

Annual core inflation, excluding volatile food and energy items, remained steady at 2.2% for the third consecutive month.