Korea’s inflation on gradual decline: BOK Deputy Governor

[Photo by Yonhap]

South Korea’s inflation rate is expected to continue its gradual decline moving forward but uncertainties linger such as geopolitical risk, economic trends at home and abroad, and weather conditions, the Bank of Korea analyzed on Tuesday.

“The consumer price and core inflation rates continued to slow in May, as both were lower than the previous month,” BOK’s Deputy Governor Kim Woong said during an inflation meeting on Thursday.

According to the BOK, the slowdown in May‘s inflation rate was influenced by reduced hikes in the prices of core goods and agricultural, livestock, and fishery products.

The prices of petroleum products and processed foods, however, gained.

The base effect from last year’s hikes in electricity and city gas rates also played a role.

[Graphics by Song Ji-yoon]

“Given the recent declines in international oil and agricultural product prices, we expect that the inflation rate will continue its gradual decline as projected in May,” Kim said.

“We need to wait and see if inflation converges to our target as expected, considering the uncertainties related to domestic and international economic trends and weather conditions amid geopolitical risks.”

According to data released by Statistics Korea on Tuesday, the consumer price index gained 2.7 percent in May from the same period a year ago.

The index rose from 2.8 percent in January 2024 to 3.1 percent in February and March before falling back to below 3 percent in April.

The core inflation, which reflects long-term price trends, rose 2.2 percent in May, down from a 2.3 percent increase in April.