South Korea’s consumer inflation accelerated in August, although the increase was slightly below economists’ expectations, with the rise largely reflecting base effects from a year earlier.
The consumer price index (CPI) rose 3.1% year-on-year in August, up from 2.8% in July, according to the Ministry of Data and Statistics. Economists polled by Reuters had expected inflation to rise 3.2%.
The increase was partly driven by public services, which climbed 6.5% as mobile service fees jumped 26.7% following temporary price discounts introduced in August last year.
Petroleum prices also remained elevated, rising 14.2% year-on-year in August compared with a 15.5% increase in July.
However, the Finance Ministry said inflation would have been lower at 2.5% if the one-off effect from mobile service fees was excluded. It added that nationwide fuel price caps reduced inflation by 0.3 percentage points last month.
On a monthly basis, CPI rose 0.2% in August after declining 0.2% in July. Economists had forecast a 0.3% monthly increase.
Underlying price pressures also strengthened during the month. Core CPI, which excludes volatile food and energy prices, rose 3.4% year-on-year in August, accelerating from 2.6% in July and marking its fastest increase since May 2023.
The ministry expects inflation to ease this month, although the Bank of Korea has warned that upward pressure on core goods prices is likely to persist.
The latest inflation data comes after the Bank of Korea delivered a second consecutive interest rate increase last week, as inflation remained above its target while financial stability risks continued to weigh on monetary policy.
Reuters
