Inflation rises in June

Latest reading: Inflation increased to 2.2% in June from May’s 1.9%, slightly above market expectations and the Bank of Korea 2.0% inflation target. The result was mainly driven by a base effect; however, looking at the details of the release, food prices rose at a faster pace, and transportation costs grew after two consecutive months of decline. On the flipside, price pressures in housing and utilities remained unchanged. Meanwhile, the trend pointed down, with annual average inflation falling to 1.9% in June (May: 2.0%). Meanwhile, core inflation was unchanged, coming in at May's 2.0% in June. Finally, consumer prices increased 0.03% over the previous month in June, contrasting the 0.09% drop logged in May.

Panelist insight: Commenting on the outlook, ING’s Min Joo Kang stated: “Going forward, gasoline prices are expected to rebound, along with subway fees (in the Seoul metropolitan area), potentially boosting inflation. Nevertheless, both headline and core inflation should remain around 2% for the foreseeable future, reducing inflation concerns for the central bank and allowing more focus on financial stability.”

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