BOK: "Inflation to Stay in 4% Range for a While... Annual Forecast Significantly Exceeds 3.1%"

[Asia Economy Sejong=Reporter Son Seon-hee] The Bank of Korea stated on the 5th that "the consumer price inflation rate is expected to remain in the 4% range for the time being" and "there is a high possibility that the annual rate for this year will significantly exceed the February forecast (3.1%)."

The Bank of Korea made this announcement through a press release after holding a 'Price Situation Review Meeting' at the main building in the morning, chaired by Deputy Governor Lee Hwan-seok.

Deputy Governor Lee mentioned, "Due to the impact of the Ukraine crisis and other factors, the high inflation trend may continue for a considerable period," and assessed that "the upward risks to the future inflation path have increased compared to the February forecast."

According to the 'March Consumer Price Trends' released earlier by Statistics Korea, the consumer price index last month was 106.06 (2020=100), rising 4.1% compared to the same month a year ago. This is the first time in 10 years and 3 months since December 2011 (4.2%) that inflation has shown a 4% range increase.

Prices rose mainly in petroleum products, food, and dining out, which have high purchase frequency and expenditure shares, causing the general public's expected inflation (for the next year) to also increase close to 3% (2.9%).

The core inflation rate (excluding food and energy), which shows the underlying trend of prices, recorded the highest level since June 2009 (3.0%) at 2.9%, as broad inflationary pressures continued to spread.

In particular, the Bank of Korea explained that the upward pressure on domestic prices is increasing due to supply chain disruptions caused by the recent Ukraine crisis and the resurgence of COVID-19 in China, and that the rise in global food prices will further increase the upward pressure on processed food prices and dining out prices.

Deputy Governor Lee emphasized, "If inflation expectations become unstable, they can act as additional inflationary pressures, so it is necessary to stably manage the inflation expectations of economic agents." He also requested, "Given the high uncertainty regarding the future developments of the Ukraine crisis, oil prices, and other raw material price trends, close monitoring is required."