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| ▲ Bank of Korea (BOK) Gov. Rhee Chang-yong (C, rear) presides over a Monetary Policy Committee meeting at the central bank in Seoul, in this May 25, 2023, file photo. (Yonhap) |
BOK-inflation
BOK expects inflation to pick up later this year
SEOUL, June 19 (Yonhap) -- Inflation in South Korea will pick up steam later this year after an extended slowdown, in the face of upward pressure from higher global oil prices, a potential depreciation of the Korean won and higher core inflation, the central bank said Monday.
"Consumer inflation will show a substantial slowdown and is highly likely to stay below the 2 percent level before rising to above the 3 percent level around the end of the year," the Bank of Korea (BOK) said in a report.
Consumer prices, a key gauge of inflation, rose 3.3 percent in May from a year earlier, slowing from a 3.7 percent on-year rise in April. The latest reading marked the lowest level since 3.2 percent in October 2021.
South Korea's inflation has been on a downward trend with some ups and downs after reaching a peak of 6.3 percent in July last year.
But the latest figure is still above the central bank's medium term target of 2 percent.
"Core inflation is judged to face the risk of upward pressure amid uncertainties, such as a higher oil price trend, future economic conditions and public utility price hikes," the central bank said.
Core inflation, which excludes volatile food and energy prices, rose 3.9 percent on-year last month, slowing from the 4 percent on-year gain the previous month but still higher than consumer inflation.
The central bank assessed that the trend of higher core inflation may continue longer than expected due to sound domestic demand and job conditions in addition to widely expected hikes in public service fees later this year.
The minutes from the central bank's monetary policy board meeting on May 25 also showed that most board members raised their guards against complacency over slowing inflation.
Last month, the BOK kept its benchmark rate unchanged at 3.5 percent, the third straight month of a rate freeze, as it trimmed this year's growth estimate in the face of an extended slowdown in exports amid easing inflationary pressure.
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