South Korea's Inflation Expected to Gain Speed in Late 2023

The Bank of Korea (BOK) said in its price stability report that the consumer price inflation was forecast to fall to the 2 percent range by the middle of this year due to the base effect, which means last year's inflation stayed relatively high, while remaining below the core inflation for the time being.

South Korea's headline inflation slowed to 3.3 percent in May on a yearly basis after peaking at 6.3 percent in July last year, topping the BOK's mid-term target of 2 percent for over two years.

After reaching a peak of 4.3 percent in November last year, the core inflation slowly slipped to 3.9 percent in May this year.

The BOK said the consumer price inflation (CPI) was predicted to pick up steam after the middle of this year and fluctuate around 3 percent by the end of the year.

Cited by the BOK as upward inflationary risks were the continuously high core inflation, higher global crude oil prices, and rebound in the won/dollar exchange rate.

Downward risks also lingered such as deepened economic downturn at home and abroad as well as slower hike in public utility rates by the South Korean government.

The BOK left its policy rate unchanged at 3.50 percent since January after hiking it by 3.0 percentage points for the past one and a half years.

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