South Korea inflation cools to three-month low in July, but risks remain
CPI rose 2.8 per cent in July from a year earlier
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[SEOUL] South Korea’s consumer inflation softened to a three-month low in July, coming in below market expectations on a fall in oil prices, though policymakers remained wary of upward price pressures.
The consumer price index (CPI) rose 2.8 per cent in July from a year earlier, after rising 3.2 per cent in June, data from the Ministry of Data and Statistics showed on Tuesday (Aug 4). That was weaker than a median 3 per cent increase tipped in a Reuters poll of economists.
Over the month, the index fell for the first time in eight months, down 0.2 per cent, as prices of petroleum products dropped 5.5 per cent. Economists had expected a rise of 0.1 per cent, the same pace as in June.
“Upward price pressures, including uncertainty over the Middle East war, persist,” Vice-Finance Minister Lee Hyoung-il said.
The finance ministry estimated that nationwide fuel price caps reduced inflation in July by 0.3 percentage points.
In August, there also will be a one-off factor raising inflation by 0.8 percentage points due to the base effects of temporary mobile fee discounts in 2025, according to the ministry.
Oil prices fell to three-week lows on Monday after US President Donald Trump held off on a fresh attack on Iran in the hope of sealing a quick deal that could boost oil supplies from the Gulf.
The Bank of Korea raised interest rates in June for the first time in 3½ years and flagged more to come, as brisk growth in Asia’s fourth-largest economy fanned inflation risks.
Core CPI, stripping off volatile food and energy prices, rose 2.6 per cent in July from a year earlier, after rising 2.5 per cent in June. It was the biggest rise since December 2023. REUTERS
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