South Korea June consumer inflation hits nearly 24-year high

Consumer prices in South Korea rose more than expected in June to hit the fastest pace in nearly 24 years, government data showed on Tuesday.

The consumer price index (CPI) rose by 6 percent in June from a year before, speeding up from a 5.4-percent rise in the previous month and exceeding the 5.9 percent tipped in a Reuters poll.

It was the fastest annual rise since November 1998 and was above the central bank’s 2 percent target for a 15th consecutive month.

The index rose by 0.6 percent on a monthly basis, also exceeding a 0.5-percent rise seen in the survey.

The Bank of Korea (BOK) last month said it expected the inflation trajectory to be higher than earlier projections and that it would closely assess debt repayment burdens to determine whether a half-percentage point interest rate hike in July would be appropriate. 

The BOK has delivered five 25-basis-point interest rate hikes since last August to 1.75 percent, the highest since mid-2019, joining a global wave of policy tightening as central banks grapple with price spikes not seen in decades.

A half-percentage-point interest rate increase, if delivered in July, will be the first-time in the central bank’s history.

The core CPI, which excludes volatile food and energy prices, rose by 3.9 percent from a year ago, the fastest pace since February 2009.