The Bank of Korea Forecasts a Gradual Slowdown in Consumer Price Inflation Rate

A customer visiting Hanaro Mart Yangjae Branch in Seocho-gu, Seoul is looking at radishes. Photo by Jinhyung Kang aymsdream@

In May, the consumer price inflation rate rose by 2.7% compared to the same period last year, while the Bank of Korea forecasted that the consumer price inflation rate will continue a gradual deceleration trend going forward.

On the 4th, the Bank of Korea held a 'Price Situation Review Meeting' chaired by Deputy Governor Kim Woong, evaluating that both the May consumer price and core inflation rates decreased compared to the previous month, continuing the deceleration trend.

According to Statistics Korea, the consumer price inflation rate in May was 2.7%, slightly down from 2.9% in the previous month. The consumer price inflation rate rose from 2.8% in January this year to 3.1% in February and March, then fell back to the 2% range starting in April.

Last month, the price increases of petroleum products and processed foods expanded, but the inflation rates for core goods and agricultural, livestock, and fishery products slowed. The base effect from last year's electricity and city gas rate hikes also contributed to the month-on-month decline in the inflation rate.

The living cost inflation rate recorded 3.1%, sharply down from 3.5% in the previous month, due to the slowdown in prices of agricultural, livestock, and fishery products. The core inflation rate also slightly decelerated from 2.3% in April to 2.2% in May, mainly driven by durable goods and textile products.

A Bank of Korea official stated, "Considering the recent slowdown in international oil prices and agricultural product prices, the consumer price inflation rate is expected to continue a gradual deceleration trend as projected in May." However, the official added, "Given the persistent geopolitical risks and the significant uncertainties related to domestic and international economic trends and weather conditions, it is necessary to closely monitor whether inflation converges toward the target as expected."