South Korea's June inflation rises; July expected to moderate but remain high

South Korea's consumer price inflation saw a slight increase in June, driven by persistent rises in oil prices and a surge in agricultural product costs. The Bank of Korea (BOK) reported that the consumer price index rose 0.1 percentage points from the previous month to 3.2% year-on-year.

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In June, consumer prices increased from the previous month as oil prices continued to rise sharply and the increase in agricultural, livestock, and fishery product prices also grew.

The cost of living index, which comprises frequently purchased and high-expenditure items, also climbed to 3.4% in June, up from 3.3% in May, indicating a significant burden on lower-income households. This rise in essential goods prices exacerbates financial pressures for vulnerable populations.

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The consumer price inflation rate in July is expected to decrease slightly compared to June due to falling international oil prices and the effects of government price stabilization measures.

Looking ahead, the BOK anticipates a moderation in the inflation rate for July. This projected decrease is attributed to a decline in international oil prices and the impact of government measures aimed at stabilizing prices. However, the central bank cautioned that overall consumer price inflation is expected to remain at a high level for the foreseeable future.

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However, consumer price inflation is expected to remain at a high level for the time being, as the downward pressure from falling international oil prices is offset by increased demand pressure from economic recovery.

This persistence is due to a combination of factors, including the downward pressure from falling oil prices being offset by increased demand-pull pressures resulting from economic recovery. Core inflation, which excludes volatile food and energy prices, is also projected to continue its high growth trajectory, influenced by the pass-through of cost shocks and expanding demand. The BOK stated it will maintain a vigilant watch on the price situation.

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Core inflation is expected to continue its high growth rate due to the pass-through of cost shocks and expanding demand pressure, so we will monitor the price situation with vigilance.