Bank of Korea (BOK) Governor Shin Hyun-song on Wednesday warned of the prolonged high inflation amid the Middle East tensions.
Shin told a press conference on the central bank’s inflation targeting that consumer prices were expected to continue a high growth rate for a considerable period, forecasting that it was likely to take a long time for the energy supply chain to normalize to the pre-Middle East conflict levels and for global oil prices to stabilize.
He explained that the effect of high oil prices could ripple through other items beyond energy, noting that demand-side inflationary pressure, driven by the recovery of the domestic economy, was also expected to gradually rise.
The top central banker said wage growth also risked further escalating upward pressure on inflation from both the cost and demand sides.
The consumer price index (CPI) shot up 3.1 percent in May from a year earlier, marking the fastest gain since March 2024.
Headline inflation has stayed above the central bank’s mid-term inflation target of 2 percent for nine straight months since September 2025.
Oil products’ price soared 24.2 percent in May, raising the overall inflation by 0.92 percentage points. It was the fastest in almost four years since July 2022.
The BOK froze its benchmark interest rate at 2.50 percent in May, but two policymakers advocated the policy rate increase by 25 basis points.
Shin emphasized that the central bank deeply recognized a possibility for an intensified economic burden on people amid rising prices, vowing to closely monitor the path of future inflation and actively take measures until the central bank is confident that inflation will stabilize toward its target level.
