South Korea's central bank expects inflation to decrease in September due to fading base effects, but anticipates persistent underlying price pressures, particularly in core items, according to Deputy Governor Lee Ji-ho.
The central bank's outlook on persistent core inflation suggests that while headline figures may improve, underlying price pressures could necessitate continued monetary policy vigilance, potentially impacting interest rate decisions and economic growth.
South Korea's consumer prices increased by 3.1% in August compared to the previous year, driven by elevated oil prices and higher mobile service subscription charges. This rise marked a rebound from a 2.8% year-on-year increase in July. The Bank of Korea (BOK) projects that inflation will ease in September as the base effect from discounts offered last year fades. However, Deputy Governor Lee Ji-ho indicated that underlying price pressures are expected to persist, particularly in core inflation, which excludes volatile food and energy prices. In August, core inflation advanced 3.4% year-on-year, reaching its highest level since May 2023.
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